Britain's highest-earning rail service will be nationalised after National Express announced it would default on its operating franchise.

The East Coast Main Line, the country's busiest inter-city route, will be taken into public hands for "about a year" while a new company is found to run it.

Announcing the move today Lord Adonis, the Transport Secretary, said nationalisation was "highly regrettable" and stated that there would be no limit placed on the amount of taxpayer money that would be allocated to the nationalised service to ensure it continued to run as normal.

Talks between the Government and National Express over the franchise, which runs the London to Edinburgh route, broke down last week. The company wanted to renegotiate the contract and this morning announced it would hand back the service to the Department of Transport when its funding runs out later this year.

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Lord Adonis said: "The Government is not prepared to renegotiate rail franchises. I am simply not prepared to bailout companies that are unable to fulfil their commitments.

"If you did so all the other train operating companies would want a bailout."

He said that it was now "possible" that the Government could also take control of National Express's other two rail franchises. The terms of the agreement signed by the company allows the Government to take control of every franchise held by a company if it defaults on any one of them.

He added: "What the company has said is that it will not commit additional resources to the franchise from the holding group. National Express are defaulting on the terms of their contract.

"We have to pay out whatever it takes to ensure services continue.

"All tickets will be honoured. There will be no disruption to services. The staff will be retained. We are concerned to ensure there is continuity."

A spokesman at the Department for Transport added: "It is simply unacceptable to reap the benefits of contracts when times are good, only to walk away from them when times become more challenging."

In an interview the BBC's Today programme Lord Adonis suggested that National Express was in financial difficulties and that its Richard Bowker, its chief executive, had left as a result.

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