Ministers said the move paved the way for a “major shake-up” of Britain’s railways.
The Government said the transition to a publicly owned railway will improve reliability and support its number one priority of boosting economic growth by encouraging more people to use the railway.
It will also clamp down on “unacceptable levels” of delays, cancellations, and waste seen under decades of failing franchise contracts, it was claimed.
The Government said the change will save up to £150 million a year in fees alone by ensuring money is spent on services rather than private shareholders.
The announcement will see services across southern England – which includes the Weymouth to Waterloo line – and East Anglia come back into public control by autumn 2025.
The Government said it delivers on Labour’s manifesto commitment to bring contracts with existing rail operators into public ownership as they expire without costing taxpayers a penny in compensation.
Transport Secretary Heidi Alexander said: “For too long, the British public have had to put up with rail services which simply don’t work. A complex system of private train operators has too often failed its users.
“Starting with journeys on South Western Railway, we’re switching tracks by bringing services back under public control to create a reliable rail network that puts customers first.
“Our broken railways are finally on the fast track to repair and rebuilding a system that the British public can trust and be proud of again.”
Mick Whelan, general secretary of Aslef, the train drivers’ union, said: “This is the right decision, at the right time, to take the brakes off the UK economy and rebuild Britain.
“John Major’s decision to privatise British Rail in 1994 was foolish, ideologically-driven, and doomed to fail. It was described even by that arch-privateer Margaret Thatcher as “a privatisation too far” and so it proved.
“The privateers have taken hundreds of millions of pounds from our railways and successive Conservative governments have pursued a policy of managed decline which has sold taxpayers, passengers, and staff short.”
Rail, Maritime and Transport union General Secretary Mick Lynch said: “This is a significant step forward for passengers, rail workers, and those who want to see an efficient rail system run for the public good, rather than private profit.
“Bringing infrastructure and passenger services under one employer in public ownership, means proper investment in operations, harmonising conditions for staff, and prioritising the needs of passengers.”