UPDATED 3.24PM The Government says it backs KiwiRail, as a newly released report reveals the state owned rail company will need continuing Government funding to survive.

The review on KiwiRail's commercial status said quitting the business is the most valuable option facing the state owned rail company.

According to the report there is no operating network configuration for KiwiRail that is financially sustainable over forecast periods.

It said on a commercial basis exiting the business altogether is the highest value option.

The report said outside of an exit strategy, the economics favour a larger network targeting growth or a major downsizing to a smaller, denser network.

The review has made it clear the state owned rail company will require continual funding support from the Government if it is to cover its infrastructure costs.

State Owned Enterprises Minister Todd McClay is signalling that support will be forthcoming, highlighting the almost $2 billion the Government's invested in KiwiRail since it took office.

He said the Government is committed to rail as it offers social and environmental benefits in a commercially challenging environment.

Mr McClay said the New Zealand Transport Agency has been instructed to work with KiwiRail to develop more integrated transport options and reduce cost to the taxpayer.

Labour MP David Parker said the Government needs to provide long term secure funding so the company can plan for the future and not have to consider scrapping essential freight and ferry systems.

"Because if you don't properly fund rail, what happens is you have more trucks on the road and you have to spend more money on the roads, so you save money through supporting New Zealand rail."

Green MP Julie Anne Genter said the Government should let KiwiRail compete for funding from the roading budget and scrap the current two tiered funding system.

"If rail is able to compete for some of that funding, I have no doubt that we would find there is incredibly cost-effective infrastructure investment that we could be making in the rail network from that budget that would benefit the road network and the economy."