Workers on Virgin's East Coast rail line will start voting this week on whether to go on strike in a dispute over pay and conditions.
The Rail, Maritime and Transport (RMT) union said inferior conditions were being imposed on staff as well as changes to working conditions and sick pay.
The ballot comes days after it was announced that the East Coast rail franchise will end three years early, in 2020, at a potential huge cost to taxpayers.
Transport Secretary Chris Grayling announced that a new East Coast Partnership will take on responsibility for both intercity trains and track operations on the route in 2020.
Virgin Trains East Coast, a partnership between Stagecoach and Sir Richard Branson's Virgin, had agreed to pay the Government £3.3 billion to run the service until 2023, but there was concern that the firms were considering pulling out of the deal for financial reasons, which is what National Express did in 2009.
The route was run by the Department for Transport for six years up to 2015.
RMT general secretary Mick Cash said: "We will not stand by while Virgin East Coast attempt to impose a two-tier workforce with different terms and conditions for our members.
"Virgin East Coast are also seeking to unilaterally enforce changes to working and conditions, including sick pay arrangements, which would have a major impact on our members' working lives.
"The pay offer was put to our members and they rejected it by a large majority. Instead of negotiating, the company has sought to impose the offer. Therefore RMT is now beginning the ballot for industrial action for our Virgin Trains East Coast members.
"Our members must not be forced to pay the price for the gross financial mismanagement of this franchise which now sees Virgin/Stagecoach being lined up for a taxpayer-funded rescue operation by the Government to the tune of hundreds of millions of pounds."
A Virgin Trains spokesman said: "We have offered members what we believe is a very fair 3.2% pay increase and we remain open to discussions with them."
The ballot will close on December 20.
:: Members of the RMT and the Transport Salaried Staffs Association on Virgin Trains West Coast are to stage a series of strikes in December and January in a separate dispute over pay.
The walkouts will be held for 24 hours on six dates, between December 15 and January 29.
Both unions say they want a similar pay deal to one agreed with drivers.
A spokesman for Virgin Trains East Coast said: "We are disappointed with the RMT's decision to ballot members since we have offered a very fair 3.2% pay increase.
"We can reassure customers that we expect to be able to run a near-normal service in the event of any industrial action."