KiwiRail is planning to close the Gisborne to Napier rail line, Gisborne-based Labour MP Moana Mackey says.
The company has denied it will be closed and says the line has simply been "mothballed" but in a statement on its website, it says the line is not commercially viable now or in the future.
Nearly six months ago the line was damaged when a storm washed away large parts of the track.
KiwiRail said it would cost about $4 million to repair it.
It already cost about $2.1 million a year to maintain the track infrastructure and a further $1 million year to run one to two train services a week, the website said.
Ms Mackey said that meant a decision to close the line was inevitable.
She said a document leaked to Labour a few weeks ago showed KiwiRail was planning to permanently close the line between Gisborne and Wairoa.
"At that time we were told that no final decision had been made."
But she said the statement on the company's website that said even if demand for freight services was to be generated locally, the estimate of the infrastructure costs to maintain that level of service would far exceed the potential revenue gained, was worrying.
"This does not stack up with what local businesses are saying about the economic potential of the line."
Ms Mackey called for the Government to release the business case to the Gisborne and Hawkes Bay councils so they could analyse the figures and have them independently reviewed before any final decision was made.
Labour's Transport spokesperson Phil Twyford said the Government should front up to the Gisborne community.
"Ultimately it's the Government's call. It's their obsession with gold plated uneconomic Roads of National Significance that has sucked money out of provincial New Zealand including for rail.
"As an isolated exporting district Gisborne needs a mix of transport options and that must include rail along with roads and coastal shipping."
Gisborne District Councillor and Regional Transport Committee member Manu Caddie also called on the Government to provide the Council with a copy of the full business case that had led to the apparent decision to close the rail line.
"KiwiRail may have skewed the figures to justify closure rather than invest in what is at present a marginal business proposition for them but a lifeline for us.
"The communities of the East Coast need an independent review by reputable economists of how KiwiRail arrived at its claim that there is no alternative. I think that is the least the Government and KiwiRail owe our region if they are going to strip us of this billion dollar investment."
Mr Caddie said mothballing was never a temporary arrangement.
"Look what happened in the Bay of Plenty when the line was mothballed, it doesn't take long to deteriorate to a point where its unsalvageable."