Rail chiefs are tomorrow expected to announce the postponement of a much vaunted upgrade of the East Coast Main Line, which would have created thousands of jobs.

The Strategic Rail Authority (SRA), which will publish an annual report on its strategic plan today, is believed to have shelved the project and others across the country, due to a funding crisis.

The £2bn East Coast Main Line upgrade would have doubled the frequency of services, massively increased train capacity and boosted the region's economy by an estimated £100m a year.

It was to be jointly funded by GNER, the SRA and Railtrack, but its estimated cost quickly spiralled and only phase one, the upgrade of Leeds station, was completed.

Rail passenger groups and businesses in the North-East said last night they were bracing themselves for bad news.

Ernie Preston, secretary of the North-East Rail Passengers Committee, said: "It would be extremely disappointing if nothing was going to happen.

"We could understand the need to scale down in light of the financial situation but if the upgrade was to disappear entirely it would be bad news for everyone."

The SRA is expected to announce plans for a new £6bn London to Scotland high-speed rail route, which could run parallel to the East Coast line.

An upgrade of London commuter routes and the West Coast main line are likely to go ahead. .