First Group, one of the contenders for the trans-Pennine express (TPE) franchise, has dropped a court action against the Strategic Rail Authority (SRA), with an announcement on who will run the route imminent.

First, which has teamed up with French transport operator Keolis to bid for the route, had issued a legal challenge against the SRA after it failed to pre-qualify for the Greater Anglia rail franchise.

The High Court instructed the SRA to release papers evaluating the merits of train companies that had expressed an interest in the franchise.

Now, First has withdrawn its action, which sought a review of why it had been "unreasonably excluded" from the franchise.

Last night, sources close to the trans-Pennine battle suggested it was "politically a good move".

First and Keolis are rivalling troubled Connex for the route, which links Newcastle, York, Leeds, Manchester and Liverpool, with an announcement expected on the winner later this month.

Arriva Trains Northern currently operates the TPE but its extended franchise runs out later this year.

In a statement, First Group said: "We have received assurances from the SRA that we are still a valued participant in the railway industry.

"As a result, we are now confident that we can work with them in a constructive manner in the future and put the past behind us."