The £7.5bn Thameslink project designed to run trains automatically through central London every two and a half minutes will now not be completed until the end of the decade.

Passengers have suffered years of disruption due to engineering works to rebuild London Bridge and surrounding tracks, with the promise of a high-capacity service from 2018.

Substantial benefits will be seen from May 2018, boosting capacity significantly - enough for around 35,000 more passengers at peak hours – but the promised 24 trains an hour will now not be introduced until at least December 2019.

The trains will be run by Govia Thameslink Railway (GTR), the franchise which includes the troubled Southern service, but the operator has concluded it will not be able to introduce the new timetable to schedule.

Network Rail, whose engineering budget for the project overran by 10% to £5.5bn, now says another £900m of work must be carried out on the wider network around the core Thameslink route to ensure a reliable service.

According to a National Audit Office report published on Thursday, the government requested GTR propose options to reduce the risk of further disruption on the network. The Thameslink engineering work was identified in government reports as a factor in the poor performance of Southern.

The report notes that the “wider rail network cannot yet reliably support the Thameslink programme’s new services”.

Around 70% of the proposed extra capacity will now be introduced by next summer, but faster trains linking through to parts of Kent will be held back until the first wave of upgrades are proved to work. Computer operation of trains to ensure they can run at such short regular intervals will be introduced in 2019 – a year behind schedule.

London businesses said the news was frustrating and concerning. “It’s better that they’ve come clean, rather than plough on,” said David Leam, infrastructure director of London First.

“But given the very considerable disruption over a long period of time, passengers do deserve the better services they were promised – anything short of that is very frustrating. It gives cause for concern about the capacity of the sector to deliver as promised.”

Chris Gibb, chair of the Thameslink programme industry readiness board, said: “By phasing the introduction of the new timetable in this way, we have front-loaded the benefits for passengers and then spread further changes in such a way that they can be more reliably introduced.”

Charles Horton, chief executive of GTR, said: “Passengers will see a transformation in services in May next year, when 70% of the overall capacity benefits of this exciting programme will be delivered including the full implementation of the new more reliable Southern timetable, extended routes, additional services and new trains.

“Overall there will be a massive increase in capacity for passengers into London on an expanded Thameslink.”

A Department for Transport spokesperson said: “We welcome the NAO’s findings that the Thameslink programme will deliver significant benefits for passengers and supports the recent decision to gradually introduce new services to protect passengers from disruption.”