A £260m improvement package for the region's railways was announced last night by the new operator of the TransPennine Express rail franchise.

British transport company FirstGroup and Keolis, the largest private rail operator in France, were the preferred bidders and will take over the franchise from early next year, the Strategic Rail Authority (SRA) revealed.

The services, currently run by Arriva Trains Northern and First North Western, include links from Newcastle and Darlington to Liverpool, Manchester and Leeds.

The consortium's bid, which beat off competition from troubled operator Connex, included plans for a new fleet of 100mph diesel trains that it hopes will lead to stronger reliability of rail services. A total of 200 jobs will be created.

A new timetable will be announced in December next year, delivering an hourly service, with increases in the frequency of trains and reductions in journey times.

The news has been welcomed by the rail passengers' committee for the North-East.

Deputy secretary Frances Critchley said: "It is the first bit of good news that we have had in a long while.

"This announcement is very exciting for us in the North because of the investment of £260m, which we understand will be spent on new trains."

All 30 railway stations that would be managed by the franchise are to be upgraded.

SRA chairman Richard Bowker said: "This franchise will deliver better trains with better performance, improved services and more capacity - the things that matter to passengers.''

The new franchise will run for eight years, with a further five-year option.

Moir Lockhead, chief executive of FirstGroup plc, said: "Together with our partner, Keolis, I am confident that we can provide a high quality service that will contribute to the economic growth of the region and provide an attractive alternative to the car."

Connex, stripped of its southern services by the SRA this month for financial incompetence, was rumoured to be in pole position to win the franchise.

Sources have suggested that following the SRA's decision on Connex, it was forced to backtrack on the decision to award the firm the franchise - a point that was denied by an SRA spokeswoman last night.