A £260m improvement package for the region's railways has been announced by the new operator of the TransPennine Express rail franchise.

British-based transport giant FirstGroup, and Keolis, the largest private rail operator in France, were the preferred bidders, set to take over the franchise from early 2004, the Strategic Rail Authority revealed.

The services, which are currently run by Arriva Trains Northern and First North Western, include links from Newcastle and Darlington to Liverpool, Manchester and Leeds.

The consortium's bid - which beat off competition from troubled operator Connex - includes plans for a new fleet of 100 mph diesel trains that it hopes will lead to stronger reliability of rail services. A total of 200 jobs will also be created.

A new timetable will be announced in December 2004 which will deliver an hourly service with some increases in the frequency of trains and reductions in journey times.

The news has been welcomed by the Rail Passengers committee for the North-East.

Deputy secretary Frances Critchley said: "It is the first bit of good news that we have had in a long while.

"This announcement is very exciting for us in the North because of the investment of £260m which we understand will be spent on new trains."

All 30 railway stations that would be managed by the franchise are to upgraded under the plans.

Strategic Rail Authority chairman Richard Bowker said the franchise would give passengers what they wanted.

''When we talk about Britain's railway, properly delivered, this is what we mean.

''This franchise will deliver better trains with better performance, improved services and more capacity - the things that matter to passengers.''

The new franchise will run for eight years with the option of extending it for another five years.

Moir Lockhead, chief executive of FirstGroup plc, said he was ''delighted'' to have won the franchise.

''Together with our partner Keolis I am confident that we can provide a high quality service that will contribute to the economic growth of the region and provide an attractive alternative to the car. ''

Transport groups are due to put in bids any time now for a new Northern Franchise which will combine local rails routes from both sides of the pennine.

The successful bidder is expected to be announced in the Autumn. .