Heathrow's terminal 5 descended into chaos again yesterday as fresh problems with its controversial baggage system caused flight cancellations and delays on what should have been its first day of normal operation.

As passengers arrived for school holiday getaways, the computer system which sorts bags before they are loaded on to flights crashed. Staff were forced to sort them manually as 24 British Airways flights were cancelled and the departures board registered delays of up to three hours on some others. The airline described the situation as 'incredibly disappointing' and said it was urging airport operator BAA to resolve the problems as quickly as possible.

BAA said it was a software problem in the baggage system. 'We know what the problem is. We have a potential solution and we are having to carefully consider how and when we apply this to avoid further problems,' said a spokeswoman.

BA had hoped to operate a 'full flying schedule' yesterday for the first time since the terminal's opening debacle 10 days ago. Then, glitches with the new baggage handling system led to almost 250 flights being cancelled in the first four days, and a luggage mountain of 28,000 bags that missed flights. At least 9,000 bags have still not been reunited with their owners. The problems are estimated to have cost the airline about £16m so far.

Staff had been optimistic that yesterday would see the first day of smooth operation. It was thought that less heavy weekend traffic would enable BA to prepare for a full weekday service for the first time from tomorrow.

BA said that the terminal had run very well on Friday and that there was no fall-off in bookings. It said yesterday's failure had been in the 'baggage reconciliation system' which ensured bags were not loaded on to the aircraft when the passenger was not travelling. 'We are now having to manually reconcile bags for each flight, which takes considerably more time than using the automated system.'

One passenger, who asked not to be named, had come from the Midlands to catch a 2.45pm flight to Basel, Switzerland, only to be told that he would now have to catch another flight leaving after 7pm. 'It's frustrating. I just wish we could have had this information earlier, because I could then have flown from City Airport. I thought things were meant to be getting better at Terminal 5. It really has been a PR disaster, promising so much but, so far, delivering very little,' he said.

Americans Jan and Philip Sorensen had already checked in for their 12.15pm Berlin flight when BA told them it was cancelled and they should go to an information booth. 'We were told to follow someone and were left with the impression we were being looked after. But then we were brought out into the arrivals area and deserted. No one was around to tell us what to do,' said Mrs Sorensen. Eventually they were transferred to a 6pm flight.

Passengers on some of the country's busiest railway routes also suffered . A signalling problem at London's Waterloo station led to delays and cancellations of South West Trains' services, while trains between London and Portsmouth were badly disrupted after a freight train broke down near Haslemere in Surrey on Friday.