The contractor confirmed the move in a trading update to the City this morning.

It said: “We are no longer bidding for Network Rail’s track renewal work, with our existing contract running to the end of the first quarter 2014.”

Balfour was awarded its latest long-term track renewal deal by Network Rail in 2010 alongside AmeyColas and Babcock Rail.

The contract runs until the end of March 2014 and has been responsible for around £3.5bn of track renewal work.

Balfour is one of the biggest names in track renewal and has worked on contracts with Network Rail since its inception in 2002.

A company spokeswoman said: “Balfour Beatty are not pulling out of the rail market in the UK – it’s just that they have not been successful in the recent competition for Network Rail’s track renewal work.”

The trading update confirmed that performance at Balfour’s German rail division had worsened and that “discussions with a number of potential buyers for the business remain ongoing.”

The company has also completed the disposal of its Scandanavian rail business.

Balfour added: “The group’s underlying cash performance was in line with expectations with average net debt for the year of £350 million.”