The Office of Rail Regulation said the operator must become more efficient and get by on £26.5 billion between 2009-14, compared to the £29.5 billion it has asked for - a reduction of 21 per cent.
The ORR said Network Rail must:
Deliver a major programme of work across the networks including: the Thameslink scheme, rebuilding Reading station in Berkshire, a major development of Birmingham New Street station, work on the East Coast line from Peterborough to Doncaster, a new Glasgow Airport rail link and a new line from Airdrie to Bathgate in Scotland
Improve safety and work to deliver a three per cent reduction in the risk of death or injury to passengers and rail workers
Carry out increased levels of engineering work while keeping disruption to passengers and freight to a minimum
Reduce operating, maintenance and renewal costs by 21 per cent during 2009-14, compared with Network Rail's proposed figure of a 13 per cent reduction.
ORR chief executive Bill Emery said: "We will monitor Network Rail's progress in delivering all of its obligations and the improvements required.
“We look forward to reporting on its success. However, if it is failing or appears likely to fail, we will not hesitate to take action to require the company to address its shortcomings." "
Earlier this year the regulator fined Network Rail a record £14 million for the delays on the West Coast main line over the Christmas period.