Transport chiefs have ordered a review of rail services in the North-East which could herald a cutback in the number of trains and an increase in fares.

The Strategic Rail Authority is appointing a team of consultants to look at services provided by the new Northern Rail Franchise, which includes trains previously run by Arriva Trains Northern and First North Western.

It is understood the review will seek to recommend a series of cutbacks in order to shrink the £350 million of annual subsidy ploughed into the franchise.

The organisation operates 5,000 trains carrying more than a million passengers a day and runs from the Midlands to Manchester, Yorkshire, Newcastle and Carlisle.

The SRA denied reports last night that the review was secret and said stakeholders had been informed of the move back in June 2003. A spokesman for the authority confirmed a review would take place looking at a series of issues including the number of trains operating, passengers needs and fare prices.

He said: "We are in the process of appointing consultants to undertake a through look at the franchise.

"We said that for the first two years of the franchise the existing level of services would continue and during the first two years there would be a review to look at service levels.

"It is going to look at a whole level of services that would be appropriate for each and every route.

"It will also look at fare levels as part of that and it might result in a change to services. Could that mean a loss of services?, well yes it could."

The SRA said any recommendations made by the review would go to public consultation in the summer and a final decision would be made by the Department of Transport.

Any changes to fares and train services would be pencilled into the December 2006 timetable.

Stephen Joseph, director of transport charity Transport 2000, condemned the review.

He said: "Every country in Europe plans to expand its railways. Britain is again going against the trend-a recipe for gridlock and environmental damage."

In December SercoNed and Netherlands Railways took over the Northern Rail franchise following a delay of two month.