Damage to the Taieri Gorge Railway line is worse than after the 1980 flood and could cost $100,000 to repair.
Dunedin Railways operations manager Grant Craig said he had never seen the line so badly damaged.
''The 1980 flood was the worst and I think we have got more damage than that even just from the erosion off the hills that has come down.''
The line was expected to be closed for at least a month, Mr Craig said.
Last year, Taieri Gorge Railway Ltd recorded a $137,000 profit and cash reserves would be used to pay for the repairs, Mr Craig said.
Significant washouts and slips were dotted across the line, but the worst-hit area was between the Taieri Plain and Hindon.
The extent of the damage was only discovered yesterday as staff used trucks, diggers and a work train to clear the line.
''We weren't really hit by the floodwaters. It's all of the rain having loosened the soil around the gorge, dropping it on the railway line and scouring out the railway line coming down the hill across to the river (Taieri).''
The business was in the process of contacting people who had booked trips, but the disaster had come at the best possible time.
''If you are going to have a bit of a disaster it is best to do it in the middle of winter.
''Last week was busy with the school holidays but this week had quietened right down.''
About 50 people usually travelled on the train each day at this time of year, he said.
Part of the line was scheduled to be closed in mid-August for maintenance on a tunnel, however it would now be closed between Dunedin and Pukerangi and Middlemarch for between two and four weeks.
Dunedin Railways would work with KiwiRail to reopen the Oamaru line which had been closed by slips between Sawyers Bay and Waitati so a seaside service to Palmerston could operate.
It was hoped this would start by Friday.
