Industrial action does not fully explain the poor performance of Southern Railway, Transport Secretary Chris Grayling has said.

He ordered the operator's parent company Govia Thameslink Railway (GTR) to pay for a £13.4 million package of improvements including the funding of 50 on-board supervisors and projects to benefit passengers.

Following the start of industrial action in April last year GTR lodged a claim for force majeure, arguing that poor performance was due to strikes and high levels of staff sickness.

But Mr Grayling concluded that "this does not fully explain the poor service that passengers received".

Southern has been involved in a bitter dispute with unions over proposals for so-called driver-only operated trains, with conductors holding several strikes in the past year, while drivers have separately walked out due to the row.

But the service has also been impacted by extensive railway improvement works, with GTR admitting it had "underestimated" the impact of this.

Mr Grayling said passengers have been "badly let down" and he described the industrial action as "totally unjustified", adding that it "must stop now".

He went on: "But GTR must also do better in providing services to its passengers. When trains are cancelled unnecessarily it can cause huge disruption. And when trains are shorter than they ought to be, it can leave already busy services unbearably overcrowded."

Charles Horton, chief executive of GTR, said: "We are pleased that this issue has been concluded, and accept and are sorry that our service levels haven't been good enough for passengers.

"We run the most congested network in the UK where passenger journeys have doubled in the last 12 years.

"This has meant we have been running services for more and more passengers while also allowing stations to be rebuilt, platforms extended, track and signalling replaced and new trains and technology introduced too."

Mr Grayling was required by a court ruling to announce his decision on the force majeure claim by Thursday.

The High Court made the ruling after hearing an application by the Association of British Commuters for a judicial review into the way the minister has dealt with Southern.

London mayor Sadiq Khan said: "This fine will be absolutely no consolation for hard-pressed commuters who have been forced to suffer a litany of appalling service and spiralling fares.

"It's time for the Government to do the right thing by passengers and end this Southern misery. Ministers need to break up this failing licence now and allow Transport for London to take over the suburban routes to ensure passengers are given the service they truly deserve."

Go-Ahead, which owns GTR in a joint venture with French firm Keolis, said the £13.4 million settlement, which will impact its rail arm profits, was "very close" to expectations.

But it said annual rail profits could still be hit by up to another £5 million due to ongoing talks with the DfT over contract changes, such as a timetable overhaul.

The group said the agreement "resolves financial uncertainty relating to past industrial action and allows GTR to focus on improving services for Southern customers".

But the funding package is unlikely to soothe trade union anger, with members of the Rail, Maritime and Transport (RMT) union last week staging their 33rd day of action in a row over plans to change staffing on trains.

RMT general secretary Mick Cash said: "This latest whitewash of the Southern Rail shambles by the Government is hardly a surprise when they've been up to their necks in this fiasco right from day one.

"This pathetic response to the abject failure by Southern/GTR to deliver on their contract doesn't even stack up to a slap on the wrist. No wonder the company are gloating. Chris Grayling has let them off the hook big style."

Lianna Etkind, of the Campaign for Better Transport, described the money being spent by GTR as "too little, too late".

She said: "The Government should take control of this failing franchise, with a new start and a set-up that passengers can have confidence in, and start the process of splitting it up and devolving key London sections of it to Transport for London."

In the past 12 months less than three-quarters (74%) of Southern mainline and coast services met the industry punctuality target of arriving at their terminating station within five minutes for commuter services and 10 minutes for long-distance journeys.

Southern's metro services performed only slightly better at 78%.

The average score for all operators across Britain was 88%.