The country's biggest rail union, the RMT, said "rail workers and train users alike will breathe a sigh of relief" at the outcome of the review which will mean no service cuts or job losses.

RMT general secretary Bob Crow said: "When the Government gets it wrong we say so ? but when they get it right they deserve to be applauded."

Announcing the results of the review, Derek Twigg, the Parliamentary Under-Secretary of State for Transport, said: "The review found that the franchise operates efficiently, with its trains allocated to meet the needs of peak time travel into the major towns and cities.

"It found that revenue through fares, at 11 pence per passenger mile is lower than for other comparable rail operators. In the Passenger Transport Executive areas (main urban areas), which account for 72 per cent of passenger journeys, the figure is as low as eight pence per passenger mile.

"In the light of these findings, and the growth which the franchise is currently experiencing, the Department has concluded that there is no compelling case for amending the current timetable or allocation of rolling stock."

Northern Rail's managing director Heidi Mottram said: "We're delighted with the outcome of the review, which has recognised the efficiency of the operation."

The Northern Rail area covers more than 2,000 services stretching from north of Newcastle and Carlisle, to Scarborough and Cleethorpes, across to Leeds, Manchester and Liverpool, and into Lincoln and Stafford.