The East Coast rail franchise has been opened out to bids from the private sector, in a move which is likely to take it out of public hands.
The move, which has been branded "privatisation for privatisation's sake" by unions, will see the London to Scotland route taken over by a private firm despite a strong financial performance and positive customer reviews.
"It is completely the wrong decision to focus obsessively on an unnecessary privatisation of InterCity services on the East Coast," shadow transport secretary Maria Eagle said.
"Ministers must be very careful not to mislead the public as they make their case for this misguided sell-off.
"The current not-for-profit operator has returned £640 million to taxpayers and reinvested a further £40 million, profit that in future will be shared with shareholders rather than benefiting passengers under the government's plans."
TUC general secretary Frances O’Grady said: "This decision defies all logic. Since returning to public ownership the East Coast Mainline has flourished with passenger numbers and customer satisfaction increasing and all profits re-invested back into improving the service.
"The government, however, is not interested in evidence-based policy and is once again putting the interests of private companies and shareholders before those of commuters and taxpayers."
But transport secretary Patrick McLoughlin said the move would improve services.
"This programme is a major step in delivering tangible improvements to services, providing long-term certainty to the market and supporting our huge programme of rail investment," he said.
"Above all, in future franchise competitions, we are placing passengers in the driving seat by ensuring that their views and satisfaction levels are taken into account when deciding which companies run our railway services.
"Franchising has been a force for good in the story of Britain's railways, transforming an industry that was in decline into one that today carries record numbers of passengers."
In a separate announcement the Department for Transport confirmed Virgin would continue to run the West Coast Main Line until April 2017 after it U-turned on a previous decision to hand the franchise to First Group.