Twitter / @richardbranson
A clip, which was first published by the Guardian last week, appeared to show the Labour leader sat on the floor of the train during the three-hour journey.
The video was shared by his campaign team to raise awareness of his policy to renationalise Britain's railways and tackle the problem of over-crowded services for commuters.
However, on Tuesday, the Richard Branson-owned company put out a press release which challenges Corbyn's claim that there was nowhere to sit on the train. The Telegraph, which said it had seen the footage too, also published a story supporting this.
Virgin also published screenshots from the CCTV footage recorded on the day, which appears to show Corbyn walking past empty, unreserved seats prior to sitting on the floor, and then taking a seat on coach H once the filming was done.
In the statement, Virgin Trains says:
"Film footage released to the media showed Mr Corbyn sitting on the floor of a three-hour Virgin Trains service from London to Newcastle claiming it was 'ram-packed.'
"CCTV footage taken from the train on August 11 shows Mr Corbyn and his team walked past empty, unreserved seats in coach H before walking through the rest of the train to the far end, where his team sat on the floor and started filming.
Virgin Trains
"The same footage then shows Mr Corbyn returning to coach H and taking a seat there, with the help of the onboard crew, around 45 minutes into the journey and over two hours before the train reached Newcastle. Mr Corbyn's team carried out their filming around 30 minutes into the journey.
"There were also additional empty seats on the train (the 11am departure from King's Cross) which appear from CCTV to have been reserved but not taken, so they were also available for other passengers to sit on."
Branson himself then weighed into the debate, tweeting a picture of Corbyn walking past empty seats as he boarded the service.
Mr Corbyn & team walked past empty unreserved seats then filmed claim train was 'ram-packed' https://t.co/R5hawIpQek pic.twitter.com/22t8EkjW5l
- Richard Branson (@richardbranson) August 23, 2016
Shortly after Virgin released the statement, Corbyn's leadership rival published a tweet which appeared to take a subtle dig at the current Labour leader.
I'd quite like to see what happens when you get @OwenSmith_MP's ordinary people and @david_cameron's hard working people in the same room.
- Vonny Moyes (@vonny_bravo) August 23, 2016
Business Insider has contacted Corbyn's office for comment.