Rail services on the East Coast Main Line will be brought back under public control following the termination of the franchise agreement with Virgin Trains East Coast (VTEC), Stagecoach Group has said.
The firm, which owns 90% of VTEC, said it was "surprised and disappointed" that the Government chose not to award it a new deal to continue running services on the London to Edinburgh route.
Trains will be run by the Department for Transport (DfT) through an operator of last resort (OLR).
Stagecoach pledged to "work constructively with the DfT and the OLR in the weeks ahead to ensure a professional transfer to the new arrangements".
Transport Secretary Chris Grayling told the Commons in February that the franchise would only be able to continue in its current form for a "very small number of months" as Stagecoach had "got its numbers wrong" and "overbid".
In November 2014, Virgin Trains East Coast - a joint venture between Stagecoach and Virgin - was awarded the franchise to run trains for eight years.
Stagecoach reported losses on the line and in November last year Mr Grayling announced that the franchise would be terminated in 2020 to enable it to become a public-private railway.
The decision to end the £3.3 billion contract this year has been described as a "bailout" by Labour and trade unions.
Mr Grayling insisted in February that "there is no question of anyone receiving a bailout".
He added: "Stagecoach will be held to all of its contractual obligations in full."
VTEC is the third private operator to fail to complete the full length of a contract to run services on the East Coast route.
GNER was stripped of the route in 2007 after its parent company suffered financial difficulties, while National Express withdrew in 2009.
Services were run by the DfT for six years up to VTEC taking over in 2015.