Vehicle and MoT enforcement administration was one of the key areas which was up for review for being outsourced to a private company.
Helen Stevens, a negotiator for Prospect, the union responsible for 580 staff at VOSA, said: “Today’s announcement from Transport minister Jim Fitzpatrick is great news and draws a line under the hard fought campaign to keep this safety critical organisation in the public sector.
"We're delighted that common sense has prevailed after three years of arguing that outsourcing parts of VOSA would damage rather than improve safety and efficiency. It is a shame, however, that the government didn’t listen sooner and save the taxpayers millions wasted in consultants’ fees."
The Department of Transport now plans to invest £28 million in upgrading services at VOSA and create a testing service “fit for the 21st century”.
The joint union campaign against privatisation started in November 2005 when ministers at the Department for Transport asked VOSA's chief executive Stephen Tetlow to investigate the feasibility of outsourcing some of the agency’s functions.