In 2006 a single company will be formed to ease rail congestion

The contract to run Thames Trains, which manages 71 stations and has a fleet of 62 trains, will be for just two years.

Bidding has been opened to the current owner, Go-Ahead Group Plc, and FirstGroup Plc, the owner of the Great Western franchise.

At the end of the two years, the Thames Train and Great Western franchises will be merged to make more efficient use of congested tracks running through the Thames Valley.

Bids to take over the franchise, which will run from April 2004 through to March 2006, will be made to the Strategic Rail Authority (SRA) from Wednesday.

Benefits for taxpayers

The SRA had been in discussions with the Go-Ahead Group when an unsolicited proposition from FirstGroup was received.

SRA managing director Nick Newton said of the tender process: "This competitive process will allow us to choose a company that offers an improved service for passengers and a good deal for taxpayers."

The authority, which has the power to shape the number and form of all rail franchises, has decided to create an expanded Greater Western franchise in 2006.

That will combine Great Western, Thames Trains and Wessex Trains, which is run by National Express Group.

Go-Ahead Group has held the franchise for Thames Trains, which is based in Reading and employs about 1,000 people, for the past six-and-a-half years.

Mike Hodson, the firm's managing director, said: "This is an excellent opportunity for Thames Trains that we are best placed to meet.

"We believe that a further two years will give us the opportunity of consolidating our successes to date."

The successful bidder will be announced in the summer.