RAIL company Grand Central last night received approval from rail chiefs for its new train services from the North-East to London.

The Office of Rail Regulation (ORR) effectively rubber- stamped the company's plans to operate three new daily services, which will run between Sunderland, Hartlepool, Eaglescliffe, Northallerton and Thirsk to London King's Cross from early next year.

But there was more misery for East Coast Main Line franchise operator GNER, which failed to change the mind of the regulator and overturn a decision to reject its bid for extra Leeds to London trains.

GNER chief executive Christopher Garnett said the decision to allow Grand Central access to its route was a "recipe for chaos", adding: "We are at a loss to understand the basis on which this incredible decision has been made and believe that the ORR has made a grave error of judgement."

The ORR did give GNER some hope by saying that it had asked Network Rail to look at future timetabling to see if there was the capacity between Peterborough and Doncaster to add additional GNER services.

ORR chief executive Bill Emery said: "We have had to consider how to balance the interests of rail users in different parts of Yorkshire and the North-East, and to take account of the effect of new services on the GNER franchise, as well as other passenger and freight operators.

''Given the limited capacity available, we believe that our decision offers the best overall outcome and will bring significant benefits to passengers on the route."

As an "open access operator" Grand Central does not have to pay the same fixed charges to the Government to operate its trains as GNER and it has faced claims that it will simply raid revenue from its bigger counterpart.

The firm has pledged to create up to 50 jobs in the region, and said it will begin securing rolling stock for its new services.

Managing director Ian Yeowart said: "As has been clearly proved, and identified by the ORR, the overall business and economic case for the North-East was compelling, and we are grateful to all those who have contributed to this successful outcome."

The North-East Chamber of Commerce and Association of North-East Councils (ANEC) welcomed the news.

Councillor Mick Henry, chairman of ANEC, said: "This is a significant announcement and excellent news for the North-East, particularly Sunderland and the communities around the Durham Coast and the Tees Valley."