The Strategic Rail Authority has reached an agreement with a train operator over a pioneering procurement deal for upgrading stations between Birmingham and London.
The contract, with Midlands rail company Chiltern Railways, will result in £50m of private funds being invested in Chiltern's rail system over 20 years. The money will be used on station improvements, platform extensions and maintenance depots.

A source close to the deal said the big advantage of this scheme for would-be investors was that it radically reduced the risk for financial backers by guaranteeing payments for work carried out, even if any of the parties to the contract collapse.

The source said: "It enables funders to have a reasonable degree of certainty that if Chiltern merges with another firm, or collapses, the funder's assets will be treated as central to the operation."

The source said the deal was a step in the right direction after the Railtrack debacle. "Franchise deals of this kind have been very slow so far. This is a bit of progress."

The decision to go ahead with the scheme comes as speculation mounts over how large-scale rail work will be procured after the collapse of Railtrack.

One PFI expert said the government was looking at two models. In one, train operating companies would be linked up with contractors such as Bechtel or Jarvis in so-called special purpose vehicles; in the other, the SRA and Railtrack's replacement would play a central role in overseeing projects.