John Prescott has announced a boost in spending on rail safety

The south central franchise covers Surrey and Sussex, and Connex will continue to run services there for at least the next year. Connex will retain its south-east franchise, which was not up for renewal.

Connex, owned by the French conglomerate Vivendi, was originally given a franchise to run the service for seven years.

Its is the second of a series of franchises being renegotiated by the government.

Investment plan

Go-Ahead already runs two other London rail routes, one of which - Thames Trains - was involved in the Ladbroke Grove crash.

Connex has offered, if it wins, a �1.5bn investment plan to provide new trains, better stations, and even charm training for its staff.

Go-Ahead has put in a similar bid, and its Thameslink franchise shares some rail lines with Connex.

Winning would turn Go-Ahead into London's dominant train operator.

Deputy Prime Minister John Prescott is expected to highlight the announcement as a sign of the government's intention to improve the rail infrastructure.

It was announced on Monday that Railtrack is to receive an extra �855 million to improve rail safety in the aftermath of the Hatfield crash.

The government has expressed the aim of reducing the number of companies running the railways.