The rail passenger watchdog has urged train companies to issue "yellow cards" to people traveling without the correct tickets rather than rush to fine or prosecute.

Transport Focus says a new system is needed to ensure passengers who make honest mistakes are not unfairly penalized amid growing concerns about measures being taken to crack down on fare evasion.

Many passengers have been fined or prosecuted for minor discrepancies, with some being fined over £400 for inadvertently using their railcard incorrectly to save less than £2.

The regulator has called for a yellow card system to be introduced nationwide, under which first-time passengers who make an offense would be informed of the problem, their name taken down and recorded, with fines only imposed for repeat offenses.

Transport Focus is calling for the introduction of a central digital record of rail cards so inspectors can easily check whether passengers are eligible for discounts if they forget to bring their card or cannot access it online when needed.

It is claimed that passengers may be reminded when their railcard is about to expire. More broadly, the regulator said the industry should simplify its fares and ticketing systems.

Transport Focus rail director Natasha Grice said the regulator had long been concerned about the complexity of rail fares, making it difficult for some passengers to get the right ticket.

"We understand and support the principle that all rail users should pay their fares, but we want to ensure passengers who make innocent mistakes are not unfairly punished," Grice said.

The call comes in response to a government-authorized inquiry into how train operators tackle fare evasion after ministers raised concerns that innocent mistakes were unfairly punished.

Fare evasion is estimated to cost the industry £240 million a year.

Grice added: "There are steps the rail industry can take now to make things better and our research tells us that improved approaches to revenue protection are needed if rail are to build trust and confidence. Recovering this money can Help increase investment in services and make passengers’ lives better.”

The government has also pledged to simplify the ticketing system as part of wider UK Rail reforms.

The Office of Rail and Road last month launched a review of revenue protection practices, including fines and prosecutions, and asked any passengers who have been penalized for boarding a train without the correct ticket to share their experiences.

Notorious cases include a Northern Rail passenger who was prosecuted and fined £462 after mistakenly buying an 'anytime' ticket with her railcard and traveling before 10am, saving just £1.60. The operator has since said it would drop similar prosecutions.

A ruling last year dismissed more than 70,000 fare evasion prosecutions. Northern Rail and three other rail operators have filed proceedings confidentially in the District Court.