Rail services on the East Coast Main Line are being brought back under government control.
Transport Secretary Chris Grayling told Parliament that temporary state ownership would provide the smoothest transition to a new operator.
The service is being renamed London and North Eastern Railway (LNER) a brand last used in the 1940s.
It is the third time in a just over a decade that the government has called a halt to the East Coast franchise.
Mr Grayling told Parliament that after two months of analysis he had concluded that bringing the service back under the control of the Department of Transport was the best option.
He said the aim was to use a period of state control to establish a new public-private partnership from 2020.
The London to Edinburgh line has been run by a joint venture between Stagecoach and Virgin, since 2015.
The franchise was supposed to run until 2023, but it became clear at the end of last year it was running into trouble. Mr Grayling said earlier this year the franchise would end early, leading to accusations the government was bailing out the current operators.
Mr Grayling said the new arrangement would have no impact on passengers or staff.
Shadow Chancellor, John McDonnell tweeted that he welcomed the move, which he said was implementing Labour’s Manifesto promise to renationalise the railways.
Green Party MP Caroline Lucas tweeted that public ownership should be extended the rest of the rail network.
Mr Grayling told parliament that Stagecoach and Virgin have lost almost £200m, but that there had not been a loss to taxpayers “at this time”.
He said he has received “official advice” that Virgin and Stagecoach should be allowed to continue bidding for future rail franchises.
After looking into problems on the service, Mr Grayling said he was advised “that there is no suggestion of either malpractice or malicious intent in what has happened”.
He added that the firms have paid a “high financial and reputational price” in relation to the East Coast route.
Stagecoach, which has operated the franchise with Virgin Trains since 2015, said the companies had attempted to negotiate a new contract with the Department for Transport, without success.
East Coast train line to be put into public control}