The present deal expires in 2004

The current agreement is due to expire in April 2004 and a new franchise lasting seven years will be awarded.

A preferred bidder will be announced in January 2004.

The National Express Group - which owns ScotRail - will have to compete with Arriva Trains, FirstGroup and Serco Rail.

Nick Newton, managing director, operations, of the Strategic Rail Authority (SRA), said: "These are four strong players with considerable rail experience.

'High threshold'

"They had to reach a high threshold to pre-qualify and demonstrated an understanding of and commitment to Scotland's rail services."

Arriva Trains, which already runs the Merseyside and Northern train franchises.

FirstGroup operates the Great Eastern, Great Western and North Western routes while Serco Rail/Netherlands Railways runs, among others, the Docklands Light Railway in London.

'Best possible agreement'

The four companies will now submit detailed bids.

The SRA's partners in the franchising process are the Scottish Executive and the Strathclyde Passenger Transport executive.

SPT chairman Eric Ross said: "A lot of hard work has gone into the re-franchise process to ensure that Scotland will have the best possible agreement that will deliver better rail services for all of the country."