The battle to run the rail network's East Coast Main Line has been won by the present operators GNER in what was described as "the biggest financial transaction in European railway history".

An "Advised in Birmingham" deal, under the new franchise, GNER will pay £1.3 billion to the Treasury over the life of the franchise, which will be seven years, or extended to ten years if performance targets are met.

DLA Piper Rudnick Gray Cary acted for GNER - the team was led by Birmingham-based commercial and projects partner Andrew Herring, supported by commercial & projects partner Nick Painter and associate Andrew Jones.

Mr Herring said: "DLA Piper is proud to have acted for GNER as the first incumbent franchisee to be renewed in open competition since privatisation.

"Not only has this been the biggest deal, but it sets new standards for the industry. This is a great day for the UK rail industry, and the status of DLA Piper's rail practice is demonstrated by the fact that we have advised GNER through prequalification to success in this hard fought competition."

To retain the franchise, which it started running in 1996, GNER beat off the challenge of three other parties, including Sir Richard Branson's rail company Virgin Trains.

Transport Secretary Alistair Darling said: "The Government wants to see improvements in the quality of service to passengers as well as a good deal for taxpayers.

" GNER is committed to improving punctuality and reliability of its services along the entire East Coast route. It will refurbish carriages and invest in stations, as well as maintaining the high levels of on-board service.

"Improvements like this will encourage more and more people to travel by train."

The new franchise, announced by the Strategic Rail Authority, will start on May 1.

GNER's chief executive, Christopher Garnett, said: "Everyone in GNER is delighted to have won a new franchise. We look forward to building a bigger and better railway, running extra services with more reliable and more comfortable trains, and carrying many more passengers.

Bob Crow, leader of the biggest rail union, the RMT, said the deal raised the threat of "service cuts and massive fare rises".

He cautioned: "This is not good news for the travelling public or for our members.

"This franchise should have been brought back in-house. Instead, we have the prospect now of higher fares, service cuts and a squeeze on our members' terms and conditions.

"We will resist any attacks on our members' jobs or pay and any cuts in services."