The Government has scrapped the existing franchise deal for a main London to Scotland rail route because of the financial crisis engulfing the parent company of the route's operator GNER.
Passengers and services on the East Coast Main Line will carry on as normal under a special deal struck between the Department for Transport (DfT) and GNER.
GNER will run the line on behalf of the DfT for the next 12-18 months under a no-fee management agreement while a competition to find a new franchisee takes place.
GNER could still bid for the new franchise but will face strong competition, with the giant transport company FirstGroup, which already runs four franchises, saying it intends to enter the East Coast bidding.
As part of its franchise deal, GNER had had to pay the Treasury £1.3 billion over 10 years.
However, GNER's parent company Bermuda-based Sea Containers has filed for bankruptcy protection in the USA and has been suspended from the New York Stock Exchange.
Transport Secretary Douglas Alexander said: "The Government made it clear that rail operators that fall into financial difficulty should expect to surrender the franchise and not receive financial support. To do otherwise could set the precedent that we are willing to bail out operators at extra cost to the taxpayer.
"This agreement protects the interests of both passengers and taxpayers. It will ensure services operate as normal until a private sector franchise operator can be put in place."
GNER chairman Bob Mackenzie said GNER would not be able to meet its franchise premium obligations and that its preferred option - a contract renegotiation - was unavailable.
Transport union the RMT said the franchise should be brought back in-house to safeguard jobs, while Vale Of York MP Hugh Bayley said he had raised the matter of job losses at GNER's York headquarters - where 500 people work - with Mr Darling.
