The Department for Transport (DfT) has revealed a four-strong shortlist of bidders to replace GNER as operator of the East Coast mainline rail franchise.

Arriva, FirstGroup, National Express and a Virgin-Stagecoach joint venture will compete to run the London to Leeds, Newcastle and Scotland franchise.

The refranchising of the route, prompted by difficulties at Sea Containers, GNER’s parent, should prove of particular interest in Westminster. The East Coast route serves the constituencies of Tony Blair, Gordon Brown and Alistair Darling, the Trade and Industry secretary.

GNER did not rebid for the franchise, although it is understood the rail group's management team have been approached by potential bidders to work together.

Arriva’s appearance on the list gives it a third opportunity to land its first long-distance franchise, having already pre-qualified to bid for the new East Midlands and Cross Country franchises.

A successful bid from FirstGroup would give a significant boost to its rail business and complement its local ScotRail services in Scotland.

It also runs inter-city services between London and the South West of England and runs trains on the East Coast mainline with its Hull Trains service.

Virgin and Stagecoach would jointly control both of the key London to Scotland rail routes should its joint venture bid succeed. The two groups jointly run Virgin Trains, which operate services on the West Coast mainline between London and Glasgow, and the Cross Country franchise, which connects the South-West of England to the North East and Scotland.

The specification for bids will be published next month, with a June deadline for final proposals. The successful bidder is due to be announced in July or August. The DfT hopes to start the new franchise in late autumn.

All bids will be subject to approval by competition regulators.

The DfT today refused to say how many parties had expressed an interest in bidding for the franchise. The re-franchising process hit controversy earlier this year after potential bidders complained that the DfT had not allowed them sufficient time to complete pre-qualification work. That, rail executives claimed, effectively restricted the competition to companies that had attempted to pre-qualify for the East Coast franchise at the last competition in 2004.

The re-franchising was kick-started at the end of last year after GNER hit difficulties, exacerbated by weaker-than-anticipated passenger numbers. The group struggled amid difficulties at Sea Containers, its parent, which entered Chapter 11 bankruptcy protection last year. GNER had attempted to regnegotiate the contract but the government refused its request, agreeing instead a caretaker management contract and launching moves to find a replacement train operator.

GNER bid £1.3 billion to run the franchise. Industry executives reckon bids for the new franchise, which will run for seven years and five months, will be closer to £1 billion.

Shares in Arriva were down 3p at 758p by 1pm. FirstGroup was 9.5p higher at 626.5p, buoyed by broker comment on its recent US acquisition. National Express was up 7p at £11.41 and Stagecoach dipped 1.25p at 165.5p.

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