Railtrack shareholders are expected to get compensation of £2.50 a share, only 30p less than the share price when Railtrack plc was put into administration by the Government in October last year.

The money is being provided by the taxpayer after big City investors threatened not to provide money for future rail investment.

Network Rail will also need a £500million rescue package from the Government to take over Railtrack plc which has debts of £3.5billion after only six years in business.

The chairman of Network Rail is former Ford Europe chief Ian McAllister said the company would elevate engineering excellence.

Network Rail managing director Iain Croucher said the company planned to reduce the average age of rails from 27 years to 15 years over the next 20 years and increase annual spending on maintenance by between 10 and 20%.

But construction companies like Balfour Beatty and Jarvis would remain responsible for work on the 23,000 miles of track and 2,500 stations.

But Railtrack chief executive John Armitt is likely to play a key role in Network Rail.

Transport Secretary Stephen Byers told the Commons that Network Rail is designed to be more efficient than Railtrack because it would have lower financing costs and no dividends to pay.

Network Rail will have a board of 13 which would be "answerable" to 100 members. About 40 would come from train operators and other rail companies. The Strategic Rail Authority would have one member and there would be 60 public interest members appointed by an independent committee.

Railtrack Group is selling stage one of the Channel Tunnel rail link  from Folkestone to Ebbsfleet for £375million to London & Continental Railways, which is building stage two from Ebbsfleet to London St Pancras.

The news about Network Rail allowed the Association of Train Operators to sneak out changes to the Network Card, reducing the discounts available for off-peak travel. The action shows that the self-defeating money-grubbing approach pioneered by Railtrack is still alive among train operators.

Now that Network Rail looks like being established, the failings of the train operators will become increasingly obvious. They will no longer be able to blame Railtrack for their own misguided policies.

One train operator, Arriva Trains Northern, has been fined £2million by the Strategic Rail Authority for failing to recruit enough drivers. It has had to cancel 1,000 trains a week because of the driver shortage.

Several other train operators have also been guilty of having too few drivers. It is reported that overall the train operators need another 1,000 drivers to run a proper service. There are currently 9,000 train drivers.