The project, which will be cut journey times by 20 per cent, will be the first since 1944 not to be paid for by the taxpayer.

It was announced last week at Birmingham Moor Street station at an event attended by transport secretary Lord Adonis.

He said: "With journey times being cut and capacity increased, these improvements are not only excellent news for passengers travelling on this busy line; they will also create significant economic benefits along the route by attracting investment and encouraging tourism, boosting local jobs and businesses."

The new main line between London Marylebone and Birmingham will be competed in 2011. Calling at Leamington and Warwick Parkway, it will cut peak journey times to London to 67 minutes and trips to Birmingham to 25 minutes.

Birmingham Moor Street station will be upgraded with new platforms in a £13.5 million project and a new line to Oxford is expected to open by 2013.

Chiltern Railways says the improvements will create a line rivalling the West Coast route to Euston.

Chairman Adrian Shooter said: "Evergreen 3 is the biggest passenger rail project for several generations not to call on the taxpayer for support.

"Working closely with Network Rail, we are going to create a new main line railway for the people of Oxfordshire and the Midlands.

"This deal demonstrates that real improvements to rail services can be paid for without public subsidy by attracting people out of their cars and onto trains."

The project will be paid for by Network Rail, who will be reimbursed by Chiltern Railways over 30 years. It will be carried out by contractor BAM Nuttall with construction firms Jarvis and Atkins.

Robin Gisby, Network Rail's director of operations and customer service, said: "This is a great scheme that will deliver huge benefits to hundreds of thousands of passengers.

"It demonstrates how Network Rail is working in partnership with train operators to continue to fund and attract big improvement schemes for the benefit of everyone who uses the rail network."