Scrapping franchising, major fares reform and handing more control of services to city regions are among the recommendations made by the Campaign for Better Transport (CBT).
The pressure group also called for the creation of a publicly-funded arm's length body to manage all aspects of rail planning.
It published the Future of Rail report ahead of the 2.7 per cent average increase in Britain's rail fares which comes into force on Thursday.
The fare increase follows another year of pain for Yorkshire commuters as trains were cancelled, delayed and had fewer carriages than they were supposed to.
Only 56 per cent of Northern services were on time in the last quarter, figures from the Office of Rail and Road show.
Rail passengers faced chaos before Christmas when Northern Rail trains were cancelled at the last minute due to “unprecedented” staff sickness.
This comes shortly after shareholders in private rail companies received £1.2bn in dividends over the past five years, according to research by the Trades Union Congress.
The Prime Minister had said he would look at transport devolution in northern cities before the election, though there is no sign yet whether he plans to keep this pledge.
Leeds North West MP Alex Sobel wrote to Boris Johnson this week demanding these promises be met. The Labour MP also called for more funding for cycling infrastructure in and around the city.
Many of the demands in today’s report have previously been spoken about by Keith Williams, who is leading a Government-commissioned review into Britain's railway.
The Department for Transport (DfT) is expected to publish a white paper based on the review's recommendations in the coming weeks.
CBT chief executive Darren Shirley said passengers have "suffered unreliable, expensive, overcrowded trains for too long" as he urged the Government to "seize its chance to put an end to nightmare rail journeys".
He added that the railways must "change fundamentally" to deliver potentially "huge" economic, social and environmental benefits.
The majority of rail services in Britain are operated under fixed-term franchises, which involve the DfT setting out specifications covering areas such as service levels, upgrades and performance.
Train companies then submit bids to run franchises, with the DfT selecting which applicants are successful.
The CBT called for this system to be replaced by several models satisfying the different needs of passengers and communities across the network.
Under the proposals, smaller packages of slots would be auctioned on intercity routes to spark competition, while private sector operators in cities outside London would be incentivised to promote integrated transport and economic growth rather than focus solely on costs and revenue.
The report pointed to London Overground and Merseyrail as evidence that more local contracts should be used for city-based train services "allowing rail to mesh with and respond to local objectives and needs".
It also called for a major shake up of the fares system to encourage initiatives such as a single national railcard, part-time season tickets and more pay as you go travel.
A Department for Transport spokesman said: "The Government will shortly bring forward reforms from the Williams Review, the first root and branch review of the rail industry in a generation.
"These reforms will put passengers first, end the complicated franchising model and simplify fares to create a fairer, more effective system."
Greater Manchester Mayor Andy Burnham, who has called for operator Northern to be stripped of its franchise, said there is "consensus" that privatisation of trains "has not worked and needs a shakeup", adding: "For far too long people have faced rising fares whilst operators continue to deliver sub-standard services on a daily basis."
Paul Plummer, chief executive of the Rail Delivery Group, speaking on behalf of train operators, said the industry has long been calling for the "bold reform of the railway" recommended by the CBT.