Transport Secretary Grant Shapps has signalled he wants to strip Northern Rail of its franchise, warning he is "simply not prepared" for the service to carry on as it is.
He told BBC Breakfast: "I've already announced to Parliament that I've kicked off the process called a request for proposal to do exactly that.
"It's completely unacceptable to have a situation where trains almost routinely don't run to a routine, don't run on time. I simply will not put up with that and I've already kicked off that process and I will be saying more about it very soon."
Pressed if he believes Northern is not fit to run the franchise, Mr Shapps replied "absolutely the case" and later said: "I don't think it's right people can't always rely on their train services and, particularly in places like Northern where it's been notably bad, I will absolutely bring that situation to an end."
Asked if his intention is to remove the franchise from Northern, Mr Shapps said: "That's right. In the autumn I wrote to the necessary parties in this with what's called a request for proposal - and that's simply where you say 'Look, I'm going to take action'.
"There are a couple of ways that can go, but one is to strip the franchise, one is to have a short-term contract. But yes, exactly as you've said, I'm simply not prepared for the service on Northern to carry on as it is and I'm taking action."
His announcement came on the same day rail fares were increased by an average of 2.7 per cent, with campaign group Railfuture describing "another decade of misery" for passengers.
Northern's fares have increased by an average of 2.5 per cent.
It follows a year of chaos and cancellations across the network and calls for changes to be made.
Mayor of Greater Manchester Andy Burnham said: “The Transport Secretary’s comments are welcome and I stand ready to work with him to develop a solution that works for passengers. But I am concerned that he has left on the table the possibility of Northern having a different form of contract. That would be a reward for failure and completely unacceptable to us. I call on the Government to rule it out, put our rail services under public control and work with us towards Greater Manchester taking devolved control.
“Today must be the last day when commuters in the North are asked to pay more for a poor service. We are fed up of waiting for promised improvements. It has already taken the Government too long to respond to our call for intervention. The Transport Secretary must urgently turn his welcome words into action and a clear plan to end the chaos, delays and cancellations.”
Wigan MP Lisa Nandy tweeted: "For years Northern passengers have put up with chaos and misery on the railways. People have given up jobs, lost time with their families and faced sanctions at work. How on earth could it have taken so long for the Tories to realise it is ‘unacceptable’?"
Also on Twitter, Makerfield MP Yvonne Fovargue said: "No need to look at - performance speaks for itself! #NorthernFail"
RMT General Secretary Mick Cash said: “Grant Shapps is big on talk about Northern Rail this morning but short on detail and this has all the hallmarks of a dead cat being slung on the table to distract from the fare rise scandal.
“If Grant Shapps was serious he would set out a timetable for removing the Northern Rail franchise from Arriva and their replacement with the public sector operator. I am seeking an urgent meeting with Mr Shapps to pin down the detail and how it affects RMT members and the services they provide.”