Southeastern has been handed a new four-year deal to run commuter railways in London and Kent, despite having the most dissatisfied passengers of any train operator.

The company, run by Govia – a joint venture of Go-Ahead and the SNCF-owned Keolis – was given a direct award without competition to continue services until June 2018. It is the seventh such deal after the West Coast franchising fiasco ripped up the government's timetable for reletting the railways.

The Department for Transport said that the operator would be forced to improve services while its subsidy would be cut. But the deal was met with dismay by passenger groups and unions who described it as a "reward for failure".

Rail minister Claire Perry said: "I know passengers on this route haven't always received the service that they deserve, which is why I am absolutely determined that today marks a fresh start for the Southeastern franchise." The DfT said that Southeastern had been given tougher performance targets to ensure improvements to customer service and train punctuality across its network. More than £70m is to be invested in better customer information systems, additional staff and maintenance.

Extensive work is continuing to rebuild London Bridge station, a major hub for many of Southeastern's services, as well as adding new tracks in the area.

Perry said: "Given these challenges, we believe that continuing the franchise rather than entering into a new one at this point will provide passengers with the best service."

Mary Creagh MP, Labour's shadow transport secretary, said: "Long-suffering Southeastern passengers, whose franchise is rated the worst in the country, face four more years of misery because of Tory incompetence on rail franchising, which has already cost taxpayers more than £50m. This franchise extension stands in stark contrast to David Cameron's rush to sell off the East Coast line, run by a not-for-profit public operator, which will have returned over £1bn to the taxpayer by April 2015."

Martin Abrams, of the Campaign for Better Transport, said: "Today's announcement comes with a welcome promise of service improvements, but the fact remains that Southeastern have been given a four-year extension despite having more dissatisfied passengers than anywhere else on the network. "

Rail watchdog Passenger Focus's most recent survey showed 12% of passengers rating Southeastern's performance as poor, and only 30% satisfied with value for money – the worst scores of any of the 23 franchises.

David Sidebottom, Passenger Focus director, said Southeastern would need to work hard to build trust and confidence. "This means delivering early and real passenger benefits, unlocking investment, and building firm foundations for the next franchise.

The RMT's acting general secretary, Mick Cash, said: "This is a reward for total and abject failure which speaks volumes about the racket which is rail privatisation. With even the minister accepting that this franchise has been a disaster for passengers it is scandalous that the publicly owned option was not even considered."

Govia will be subsidised with a total of £142m from the government over the life of the franchise – a reduction from annual payments of £82.3m in 2013 and £63m in 2014. From Sunday, Govia will also take over the running of Thameslink from First Capital Connect.

David Brown, chief executive of Go-Ahead – the majority partner behind Southeastern – said: "We're looking forward to delivering these plans and are wholly committed to improving performance and services for customers and our local communities."