HITACHI'S decision to move its global rail headquarters from Tokyo to London has been hailed by ministers as a huge vote of confidence for Britain.

The shift comes after the firm won a £1.2bn deal to make the next generation of inter-city trains at its new factory in Newton Aycliffe, County Durham.

Chancellor George Osborne said the news was fantastic.

"For people like me who have grown up with news of manufacturing jobs leaving Britain, isnt it fantastic that manufacturing jobs are coming back to Britain," he told BBC Breakfast.

Business Secretary Vince Cable said: "This move demonstrates a huge vote of confidence in Britain, it's workers and its rail industry from one of Japans biggest businesses.

"It follows the companys announcement last year of 750 new jobs at their factory in Newton Aycliffe, which I was delighted to launch with (Transport Secretary) Patrick McLoughlin.

"It's further testament to the Governments industrial strategy which is giving companies of Hitachi's stature the confidence to invest in the UK in an expanding rail sector, creating new jobs and increasing exports that will help sustain long-term economic growth."

A spokeswoman for Hitachi UK said the decision will not entail a large move of people from Japan to the UK.

The Japanese arm of the business will still be conducted from its offices in Tokyo.

Head of global rail operations Alistair Dormer said: "We will continue to deliver excellent service to our customer base whilst seeking new markets and opportunities for expansion."

The new purpose-built factory in Newton Aycliffe is expected to be operational from 2015 with full production starting in 2016.

A total of 270 carriages will be manufactured at the new plant, enhancing the factorys ability to win lucrative rail contracts across Europe.

Mick Whelan, general secretary of train drivers union Aslef, said: "We welcome this news because it will create much-needed jobs in the North-East of Britain.

"I would rather it was a British company creating jobs and winning orders from the Department for Transport, but it is good news.

"We want investment, in trains and carriages as well as in our infrastructure, to build a better railway for everyone in Britain."