Midland train builder Bombardier has received a £55 million boost after the Government announced it would be retaining the Gatwick Express rail service.

The Department for Transport revealed yesterday it would exercise a no-fault termination clause to end the service's franchise with National Express Group three years early, in May next year, and hand the licence to rival operator Go-Ahead Group.

It said all services on the franchise, which runs fast trains between London Victoria and Gatwick airport, would be incorporated into Go-Ahead's Southern franchise from December 2008.

To meet operating needs, Southern will order 48 new Electrostar trains, worth around £55 million, which will be built at Bombardier's factory in Derby.

The order should help to secure the jobs of Derby's 2,200 workforce.

Bombardier welcomed the news, saying the order was a shot in the arm to the plant, which has faced speculation over its future in recent year due to a shortage of work.

A spokesman said the company would start building the trains around the end of next year.

The DfT said Southern would commission the new 377 class carriages from Banco Santander Central Hispano's UK train leasing subsidiary Porterbrook Leasing, which will place the order with Bombardier.

Derby still faces an orders gap in the near term, but the firm said it was likely to get more business on the back of recently announced Government plans to order 1,000 more coaches to ease over-crowding on South East routes.

The DfT said the franchise change would ensure the current timetable and 15-minute service frequency on the Gatwick Express were maintained.

It also announced yesterday plans to increase capacity on the Bedford-Brighton Thameslink route, run by FirstGroup's First Capital Connect franchise, by transferring 48 coaches from Southern.

The first 16 are due to begin operating on the line, which runs from Bedford to Brighton through Central London, by the end of 2007 with all 48 in place by December 2008.

This will allow FCC to double the remaining four-carriage services to eight carriages during the peak travel period. As a result, the company said it could add almost 8,300 seats during the busiest times.

The lost capacity on Southern will be replaced by the new coaches from Bombardier.

Go-Ahead chief executive Keith Ludeman said the company welcomed the DfT's decision and was looking forward to working with the Government to deliver the new services."

National Express chief executive Richard Bowker said his group was disappointed to have lost the franchise and said employees should be congratulated for their efforts.

He said the group, which has substantial travel commitments in the West Midlands including owning Travel West Midlands buses, would continue to fulfil its requirements until the contract expired.

"We will always stand by our commitments even when the immediate commercial advantage is not obvious. We will continue to maintain this level of professionalism for our customers on Gatwick Express until our obligations expire," he said.

Mr Bowker said the company would work with the DfT to ensure a smooth transition of the franchise.

Shadow transport secretary Chris Grayling said: "The Government is at it again. Of course every new seat is welcome, but the idea that leasing an extra 48 carriages is going to solve the overcrowding crisis on our railways is for the birds.

"This comes only a fortnight after Ministers delayed plans for 1,000 new coaches until 2014. It seems they are more interested in headlines than solutions."

British Airways said it looked forward to the full restoration of the Gatwick Express service.