The much-criticised company which operates trains in Croydon looks set to be broken up.
Southern, which became part of Govia Thameslink Railway in 2015, has since been hit by extensive strike action with both drivers and crew.
Now an official government report suggests the merger of Southern with Thameslink and Great Northern has contributed to its problems.
The news will please campaigners and passenger groups who have complained about the service being provided although it could be another four years before the company is broken up.
The Department for Transport said it was “actively looking at the shape and size of the next Thameslink, Southern and Great Northern (TSGN) franchise on expiry of the existing contract in 2021.”
Strike action has been called on Southern and several other UK train companies by the RMT union for this Wednesday and Thursday, November 8 and 9.