The National Express East Coast franchise is to be taken over by the Department for Transport at the end of the week.
Transport secretary Andrew Adonis is promising that services will continue "without disruption".
National Express has now used the last of £40 million pounds which it had committed to support the franchise, and Lord Adonis told the company that arrangements for the handover will be triggered at the end of Friday evening.
In a statement to Parliament, Lord Adonis said: "I notified National Express East Coast Ltd that I am terminating their franchise with effect from 23:59 on 13 November.
"The publicly owned East Coast Main Line company will take over this franchise from that time, with an orderly handover from National Express East Coast. I can assure the travelling public that services will continue without disruption and all tickets will be honoured.
"Staff currently employed by National Express East Coast will transfer to the East Coast Main Line company under the Transfers of Undertakings (Protection of Employment) Regulations (TUPE), with the necessary statutory consultation."
The name East Coast will continue to be used, although National Express branding will be removed as soon as “as cost effectively and as soon as practicable”. A new logo has been designed.
The DfT subsidiary Directly Operated Railways, whose managing director is Elaine Holt, will be the parent of a new operating company, East Coast Main Line Company Ltd., which will use the brand East Coast. Ms Holt will also join the Board of ATOC.
The RMT is calling for the renationalisation to be made permanent, and also for the other NX franchises to be handed back as well. General Secretary Bob Crow said: "RMT is demanding an absolute assurance that this will be a permanent move that recognises the chaotic failures of privatisation on this prestige route. It would be a total waste of taxpayers' money and staff time and energy to have a third gamble on privatisation in 18 months time. We are also demanding that the government get off the fence and strip National Express of their two other franchises under cross-default. Anything else would be a reward for failure on a massive scale."
Opposition politicians are critical too. Liberal Democrat Transport Spokesman Norman Baker has added his voice to those urging the Government to terminate the other two National Express franchises.
East Coast staff will be protected under TUPE, although anyone who does not accept the transfer will be considered to have resigned, and will not be entitled to compensation. Changes to uniforms will be modest, especially as a new franchisee is expected to take over in 2011. However, there will be new badges from the takeover day, plus new ties for men and scarves for women.
The DfT is promising passengers that the service will not change for the worse, but a survey is currently under way to aid a decision about future on-board catering, and all aspects of customer service will be reviewed for "fitness for purpose". Fares policy is not likely to change. Staff are being promised, among other things, "greater visibility" of senior management.
The Department is still understood to be considering the future ownership of East Anglia and c2c, but National Express Group has disputed that the surrender of East Coast would automatically trigger "cross-default" clauses leading to the loss of its remaining franchises. Ironically, East Anglia may be about to qualify for a three-year extension after meeting performance targets.
The crisis at National Express itself is continuing. The biggest investor, the Cosmen family, is reported to be canvassing fellow shareholders to see if they agree with its call for a review led by independent advisors. Talks on a possible merger with Stagecoach broke down last week when the NXG Board rejected its offer, but deputy chairman Jorge Cosmen has urged that negotiations should be resumed. The Cosmens have also threatened to boycott a proposed rights issue worth £350 million.