Virgin Trains applied to Network Rail and the Department of Transport to run two trains a day direct from Shrewsbury to London Euston.
A previous service to the capital, operated by a different company, ceased in 2011 owing to low passenger numbers.
Network Rail rejected the bid because of fears over "punctuality". Virgin will appeal against the decision.
A spokesperson for Network Rail, the company in charge of the country's rail infrastructure, said twice as many trains were already using the West Coast Main line compared to a decade ago.
They said: "We have acknowledged that performance on the West Coast line is not good enough and we are taking steps to improve it.
"However, adding more services onto what is already the busiest mixed use railway line in the UK would mean a trade off with punctuality.
"It would have a significant negative impact on performance for the thousands of other passenger and freight services that rely on this route every day."
A Virgin Trains spokesman said the operator still wants to introduce the routes and is "working on developing a train plan".
He added: "We are reliant on Network Rail and understand that is not possible.
"We will appeal against the decision."
A Department for Transport spokesman admitted there was "limited space for new services" on the West Coast Main Line.
He added: "Transport Secretary Patrick McLoughlin is keen for the rail industry to work together to secure additional connections to Blackpool and Shrewsbury."
The Conservative MP for Shrewsbury and Atcham, Daniel Kawczynski, called into into question "the credibility of Network Rail to make such a decision given their record of regularly missing punctuality targets".
Mr Kawczynski said he wanted Network Rail to "urgently work with Virgin to review and reverse this decision".
The Wrexham, Shropshire and Marylebone Railway Company axed its rail link to London in January 2011, blaming a fall in passenger numbers.
A bid to run twice daily train services from Shropshire to London has been turned down.