Southern Rail said, at 12.45pm, that the line between Littlehampton and Ford was blocked.
This has caused disruption to services running between Littlehampton and Portsmouth & Southsea Littlehampton and Bognor Regis.
Trains have also not been calling at Warblington, Nutbourne, Bosham and Fishbourne.
"There's a fault with the signalling system between Littlehampton and Ford," a Southern spokesperson wrote on Twitter.
"To help keep you on the move, you can use your ticket on Stagecoach 700 buses.
"There is a reduced service to and from Littlehampton and you may need to use the Stagecoach 700 bus to complete your journey. You may need to allow up to 30 minutes extra to your journey time."
As of 1.45pm, engineers were on site investigating the fault.
The Southern spokesperson said: "The fault is known as a 'track circuit' failure. Track circuits detect trains on the track for the signalling to work. If these don't work, signals are 'stuck' at red."
Engineers were completing final tests at 2.40pm but Southern said 'it will take a bit of time for the line towards Ford to reopen', adding: "You may still need to use an alternative at this time."
In another update at 3.40pm, Southern wrote: "Lines are now reopen as Engineers have repaired the fault.
"Please check before you travel, as services remain subject to alternation and delay, whilst we are working back to our normal timetable."
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