Derby has been named as the location for the headquarters of Great British Railways (GBR).
The new public body will own the rail infrastructure, procure passenger services and set most fares and timetables.
Doncaster, York, Birmingham, Crewe and Newcastle-upon-Tyne were also on the final shortlist of possible locations.
Transport Secretary Mark Harper said the move would make Derby "the heart of Great Britain's rail industry".
In May 2021, former transport secretary Grant Shapps announced plans for GBR to be set up, saying it would replace an "overcomplicated and fragmented" system.
It was due to be launched in early 2024, but the implementation date has been delayed.
The selection criteria included alignment to transport connections, railway heritage and value for money.
Derby is already home to the UK's largest train factory, which employs about 2,000 people, and the former Railway Technical Centre in the south-east of the city - currently a business park - has been earmarked as a potential site for the headquarters.
Back in October, the Rail Forum, a national industry body based in Derby, said it feared government plans to overhaul the system with the new body might not go ahead.
Analysis
By Georgia Roberts, BBC Radio Derby political reporter
After months of delay and even doubts over the project coming to fruition at all, Derby has finally been revealed as the new headquarters for GBR.
There was a massive cross-party campaign regionally to push Derby's bid, with both Conservative and Labour MPs getting on board.
Still, the timing has raised a few eyebrows locally. It comes weeks before what many expect to be a difficult set of local elections for the Conservative-run Derby City Council. Their purdah period comes just a day after the official announcement - just about squeaking in time for leaders to trumpet the success of the campaign on the airwaves before rules become stricter pre-election.
Questions remain about the parliamentary timetable to get the necessary laws through Parliament to enact GBR before the next election, given the original timetable has already slipped substantially.
Some suggest the strong "political consensus" for the reform will see it through before autumn 2024, and recent events have certainly shown Westminster has an appetite for waving through sizeable legislation on a tight timetable these days.
Whenever it happens, it's clear that politicians and the many businesses here invested and linked to the rail sector are celebrating this as a much-needed boost for a city and a region that has consistently lagged behind for investment in recent years.
Prime Minister Rishi Sunak tweeted his congratulations, describing Derby as "a city which has a historic connection with the railways".
Transport Secretary Mark Harper added: "Derby will become the heart of Great Britain's rail industry, bringing together track and train, as well as revenue and cost.
"This means we will finally treat the railway as the whole system it should be rather than a web of disparate interests that it's become."
'Fantastic achievement'
Amanda Solloway, Conservative MP for Derby North, said the decision was "fantastic news".
Ms Solloway, who campaigned wearing a T-shirt with a QR code on with more details on Derby's bid, added it showcased the "city at its best".
"This decision will bring jobs, investment, and the start of a new era for Britain's railways," she said.
"Derby has a proud history of rail innovation and this title recognises the outstanding contribution that Derby has made to the UK's rail industry and highlights the city's commitment to driving innovation and excellence in rail engineering."
Conservative Mid Derbyshire MP Pauline Latham added: "It shows that working as a team with the rail industry, the city council and the public together with lobbying in Parliament and support from MPs outside of the city, we have won a prize which will give a boost to all in Derby."
Chris Poulter, Derby City Council leader, said: "Rail heritage is at the heart of our city and for this to be recognised by government is a fantastic achievement.
"The investment we'll see from this significant move will be huge, not only just for Derby but for levelling up across the whole of the wider East Midlands."
Baggy Shanker, the leader of Derby's Labour group, said: "It's been a fantastic campaign supported by residents, businesses and partners in Derby and across the East Midlands, a fantastic cross-party effort also.
"In our view Derby's bid was always the one to beat and the quality has come through, this is great news for our city."
At Derby railway station, passengers said changes had to be seen on the track.
Chris Lee, a former train driver from the city, said: "It's just another office block isn't it; it's not making trains any better, any more comfortable, any bigger. An office block won't make any difference to that.
"It needs to be run by railway people, people who know about railways, and it needs managing better and running as a public service, by the people for the people, not for the profits of shareholders."
Mark Towers and Julie Briers, who were due to travel from Derby to York on Tuesday, found their train was too busy to board when it arrived at the station.
The Derby couple, who had to wait for the next service despite having reserved seats, said the GBR headquarters announcement would be good news if changes to services were made.
Ms Briers, 59, said: "Up to today, the service is fine but thinking about it, if companies are over-subscribing tickets, things need to change. There were that many people in each coach, you couldn't get on.
"There needs to be extra coaches.
"It's good for the city, a lot of places were running to get the award so it should have a good influence on the city."
However, representatives for the other locations on the shortlist expressed their disappointment at the news.
Doncaster's elected mayor Ros Jones said the city was the "perfect home" for the rail body.
"I am deeply disappointed in today's result," she said.
"I feel strongly that placing the Great British Railways headquarters in Doncaster, in the heart of South Yorkshire, would have brought a great many benefits to our newly-crowned city and to the region."
Meanwhile, Newcastle Central MP Chi Onwurah said ministers "just don't see the North as a target for investment".
She told the Local Democracy Reporting Service: "I am incredibly disappointed that Newcastle was not chosen to be the home of GB Rail HQ. Newcastle was the birthplace of George Stephenson and the home of the railways. It was the natural choice and I want to thank everyone who worked so hard to bring GB Rail home.
"I am sorry that the government seem to have prioritised other considerations but nevertheless offer my congratulations to Derby and wish it well."
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