The High Court effectively closed down Railtrack last night after the Government refused a financial bail-out for the cash-strapped company.

At the request of Transport Secretary Stephen Byers, a High Court judge agreed to Railtrack - with debts of more than £3.3bn - going into administration.

Justice Gavin Lightman, at a special sitting of the High Court in London, said: "This is clearly a case where the making of a railway administration order is not only appropriate, but absolutely essential and I shall therefore make that order immediately."

The order places Railtrack into the hands of Government-appointed administrators, who will continue to run the railways.

The court heard that Railtrack needed funding of £700m by December, rising to £1.7bn by next March.

Mr Byers said last night: "For Railtrack, there will be no bail-out, no last-minute rescue deal paid for by the taxpayer.

"Our action today will see the end of Railtrack. In my judgment, time had come to take back the track and put the interests of the travelling public first."

He went on: "But this is only one part of a fundamental restructuring of the rail industry.

"I intend to rationalise the present system of regulation to provide a more united approach, with stronger strategic direction while stopping the day-to-day interference in the industry."

City accountants Ernst and Young will now take over, as administrators, the running of Railtrack which has the responsibility for track, signalling and stations on the rail network.

In the meantime, Railtrack shares will be suspended, with the administrators having to decide how much money to give more than a quarter of a million investors in a company whose share price has plunged from a high of more than £17 to a low last week of about £2.80.

Within three to six months, the administrators will pave the way for a private company to be set up to replace Railtrack.

Although private, the company will have no shareholders and any profit it will make will be ploughed back into the rail network.

Railtrack chairman John Robinson, whose desperate plea for cash was turned down by Mr Byers on Friday, is expected to chair the new company, whose members and directors will be chosen by the Strategic Rail Authority (SRA).

The Government will stand by its commitment to provide £30bn of public money for the railways over the next ten years.

It is hoped that the new private company will be able to attract another £30bn of private sector money.

The administrators will have to identify what value there is in Railtrack - but no taxpayers' money will be made available to support shareholders.

The members of the new company could include train and freight companies and rail passenger representatives. Directors of the company will not include any Government representatives.

The Government is hoping that the new company will be free of Railtrack's awkward conflict at its heart of trying to deliver to its shareholders yet still coming to the Government for more money while dishing out dividends.

The Government believes that the new arrangements will have no adverse effect on major rail projects already started, although experts fear the second stage of the £6.3bn West Coast Main Line upgrade might be hit.

* Hundreds of people travelling to Blackpool for the Tory Party Conference faced massive delays yesterday. Railtrack engineering works near Derby over-ran by more than 12 hours, causing all trains run by Virgin from Euston to be diverted via Birmingham. Disgruntled Tories missed their Manchester connection to Blackpool and were forced to cram on to a two-carriage Sprinter train.