UK Transport Secretary Justine Greening has approved a £4.5bn contract for new intercity express trains, helping to create 900 jobs.
Agility Trains, a consortium made up of Hitachi of Japan and John Laing, will build 596 rail carriages at a new factory in Newton Aycliffe, County Durham.
The first trains will enter service on the Greater Western Main Line in 2017 and on the East Coast Main Line by 2018.
Agility was announced as preferred bidder for the Intercity Express Programme (IEP) in early 2009, but after a series of delays it has taken more than three years for the deal to be finalised.
The project, to replace the Intercity 125 trains, will not only create new jobs but safeguard thousands more.
A total of 730 skilled jobs will be created at Newton Aycliffe with a further 200 created during construction of the factory itself, where Hitachi will assemble a fleet of 92 complete trains.
The company will also locate its European rail research and development capabilities on the site which will enhance the factory's ability to win rail contracts across Europe.
As well as building the new state-of-the-art assembly facility, Hitachi will construct maintenance depots in Bristol, Swansea, west London and Doncaster, and will upgrade existing maintenance depots throughout Britain.
Greening said: "A new train factory is fantastic news for Britain and will be welcomed by everyone who wants to see a thriving UK manufacturing sector.
"The decision to build almost 600 new intercity train carriages is great for rail passengers who will experience faster and more comfortable journeys when travelling across Britain on the East Coast and Great Western main lines."
She went on: "Hitachi is the latest major international company to invest on this scale in Britain and I look forward to this new factory in County Durham following in the footsteps of Nissan's successful car plant in Sunderland.
"There can also be fewer stronger signs that the UK is the best place in which to invest, and from which to develop new markets, than Hitachi's decision to base its European manufacturing base right here in Britain."
The new trains will have more seats and generally more space than existing high-speed trains and will accelerate faster than existing rolling stock.
The IEP announcement follows last week's announcement of further electrification on the Great Western Main Line between London and Swansea.
Together, the new trains and infrastructure will offer the potential for journey time savings of 15 minutes in Swansea to London journeys and 21 minutes in Bristol to London journeys.
Passengers travelling on the East Coast line will also see improvements to their travelling experience, as journeys between London and Newcastle will potentially be reduced by 13 minutes with the forthcoming East Coast franchise.
Construction at the Newton Aycliffe site is expected to begin in 2013 and it will be fully operational by 2015.
Watch a video of the planned Hitachi Rail Europe manufacturing plant in Newton Aycliffe.
Watch a video of the initial views of the new Intercity Express trains.