The routes of high-speed rail links to cities in the north of England have been unveiled.
Extending the already-planned London to Birmingham HS2 line as far as Manchester and Leeds is designed to cut journey times, ease overcrowding and boost regional business.
Officials say the £32.7 billion project will create at least 100,000 jobs but the government is braced for a fresh backlash from rural communities through which the line will pass and some controversy over the chosen location of stations.
Prime Minister David Cameron said: “Linking communities and businesses across the country and shrinking the distances between our greatest cities, High Speed Rail is an engine for growth that will help to drive regional regeneration and invigorate our regional economies. It is vital that we get on board the high-speed revolution.
“We are in a global race and this government’s decision to make High Speed Rail a reality is another example of the action we taking to equip Britain to compete and thrive in that race.
"High Speed Rail is a catalyst that will help to secure economic prosperity across Britain, rebalance our economy and support tens of thousands of jobs.”
The Department for Transport said there would be five stops on the 211-mile Y-shaped extension northwards from Birmingham - scheduled to be completed in 2032, six years after the first phase:
They are: Manchester - alongside the existing Piccadilly station; Manchester Airport - interchange by the M56 between Warburton Green and Davenport Green; in the East Midlands - at Toton, between Nottingham and Derby and one mile from the M1; Sheffield - at Meadowhall shopping centre and Leeds - at New Lane in the South bank area connected to the main station by walkway.
There will also be a "dedicated link" alongside the high-speed line at Crewe to link up with standard trains - reducing journey times to Liverpool and Glasgow.
A proposed spur to Heathrow has been put on hold pending the results of Sir Howard Davies' review of future airport capacity.
The project has been welcomed by many civic and business leaders in the region but the first tranche proved controversial, especially in picturesque Tory heartlands which will be affected, such as the Chilterns, infuriating MPs and countryside campaigners.
Labour backs HS2 but says there are "worrying signs" that the timetable is slipping.
Transport Secretary Patrick McLoughlin said that he intended to bring forward the consultation on phase two to begin this year, not 2014, and has asked officials to see whether the entire project can be speeded up.
Transport Secretary Patrick McLoughlin said: “The Olympics showed us that Britain has the confidence to seize opportunities today in order to secure our success tomorrow and HS2 is no different.
"It is about an investment in infrastructure that will deliver a priceless dividend: 351 miles of new railways helping people to jobs and goods to market.
“This is an unparalleled opportunity to secure a step-change in Britain’s competitiveness and this government will do everything possible to ensure that the towns and cities in the Midlands and the North get the connections they need and deserve to thrive.
“HS2 will be woven into the transport fabric of the nation, accessible to all, and I believe these proposed routes offer a great starting point for the process of engagement to follow.
“As with previous consultations, we will work closely with communities and interested parties to find the right balance between delivering the essential infrastructure that we need and respecting the rights and justifiable concerns of those who will be most affected by HS2’s construction.”
Chancellor George Osborne said HS2 would be an "engine for growth" in the North and Midlands, creating tens of thousands of jobs across the country.
He acknowledged widespread opposition to the line from communities along its route which face "very difficult" disruption to their lives, but said the economic benefits were "pretty compelling".
Deputy Prime Minister Nick Clegg defended the decision to site the new Sheffield HS2 station three miles from the city centre as he predicted the project would help heal the UK's north-south economic divide.
Mr Clegg, who is MP for Sheffield Hallam, was speaking at the site of the proposed new station at the giant Meadowhall Shopping Centre, next to the M1.
He said the HS2 project was "good for the whole country and especially good in healing this north-south divide that we have in our economy for far, far too long."
Asked about criticism that the line will not run into Sheffield city centre, Mr Clegg said "The city centre option is not a cost-free one.
"It would be a lot more expensive and also the train link would be slower, which slightly defeats the purpose of the whole exercise."
The Deputy Prime Minister said a route in central Sheffield would have cut through a 4,000 home community housing development, the state-of-the-art Advanced Manufacturing Park in Rotherham and a stretch of ancient woodland.
He said: "If you look at those balance of effects of one location versus another, most fair-minded people would conclude, as the Department for Transport has, that this is a better location."
The Institution of Engineering and Technology (IET) said that if the project is to be a success it must be developed alongside other transport requirements.
Prof Phil Blythe, chair of the IET Transport Policy Panel, said: “If the government intends to proceed with the development of a new high speed rail line, it must consider connections to the wider transport network at the outset and plan these effectively to ensure seamless, congestion free, door to door journeys.
“As most of the proposed stations are on the outskirts of major conurbations this is crucial to help maximise the benefits of any new line and to ensure local authorities can plan local transport solutions effectively to avoid issues such as a huge increase in new road users trying to access stations.
“Developing HS2 in isolation to local transport requirements would further serve to undermine this project."
Dr Colin Brown, director of Engineering at the Institution of Mechanical Engineers welcomed the announcement of the next phase of HS2 but warned that the government had to ensure it took the opportunity to invest in future engineering talent.
“This is welcome news for jobs, the economy as well as commuters," he said.
“This investment will help ease overcrowding on UK trains and help promote jobs and investment in Manchester, the East Midlands and Yorkshire.
“It also opens up the possibility of more freight being transported via rail, as well helping to encourage commuters to ditch their cars in favour of train travel – both of which will help ease congestion on British roads.
“The lower carbon credentials of moving people and freight by railway is also an important factor as we move towards our legally binding climate change act targets in 2020 and beyond.
“But the government has to make sure that the development of HS2 is also an investment into UK jobs and skills.
“The UK must seize the opportunity presented by HS2 to invest in and develop future engineering talent.”
The Confederation of British Industry said that extension beyond Birmingham was "the project's big prize", and would boost economic potential and create jobs across the country.
CBI director-general John Cridland said the plans showed "the same bold, long-term thinking that helped the Victorians build our original network".
"We cannot sit on our hands when the West Coast Main Line is set to reach full capacity by the 2020s and freight will be squeezed," he said.
"Extending HS2 to the North is the project's big prize. It will boost the economic potential of some of our biggest cities, driving growth and creating jobs across the country.
"This is the same bold, long-term thinking that helped the Victorians build our original network."
But he added: "HS2 cannot be built in isolation so we need sustained, additional capital investment in existing road and rail networks to meet increased demand.
"Ministers must work hard to secure real consensus on the route, to avoid the project being hit by years of delays."
Dr Adam Marshall, director of policy at the British Chambers of Commerce, said: "Transformative infrastructure projects like HS2 create confidence, jobs and competitiveness, as long as commitments and announcements lead swiftly to action on the ground."
"Our existing railway network is at capacity and cannot be endlessly patched up at astronomical cost, as opponents of HS2 continue to suggest."
And he added: "We hope ministers can go further still. Alongside the commitment to extend the line to Manchester and Leeds, they must envision and plan for a full national network.
"They must also reassure business communities in cities off the high-speed network that conventional lines will continue to carry good-quality services for both passengers and freight.
"Business is concerned at the news that the proposed link to Britain's only global hub airport - Heathrow - has been put on hold.
"This is an unwelcome consequence of the government's near-complete paralysis on the crucial issue of aviation and global connectivity."
Anthony Smith, chief executive of rail watchdog Passenger Focus, said: "Passengers will welcome this latest news on HS2, which will radically increase space and new services for the North.
"It could also lead to better connectivity between towns and cities - not just London routes.
"Almost as important is the space freed up on existing routes which will open up more new journey opportunities."
However, the chief executive of the TaxPayers' Alliance, Matthew Sinclair, said: "The government is deluding itself if it thinks spending vast sums of taxpayers' money on this white elephant is a substitute for a genuine plan for growth.
"The HS2 business case just isn't credible and ministers aren't being honest about the hidden costs or flawed projections that the project is based on.
"This is a rich man's train line which every family in Britain is paying a fortune for.
"It beggars belief that after the West Coast Main Line debacle and the repeated exposures of the fundamental flaws in HS2, the Prime Minister hasn't reconsidered the project.
"The government must look to strategic alternatives that could deliver greater capacity more quickly and without the enormous bill."
Northern councils whose cities will be served by the new line hailed the announcement as "excellent news", but said they also want to see a "significant government package of investment" in onward links.
Leeds City Council leader Keith Wakefield said the link would "strengthen Leeds' position as the northern transport hub and unlock major investment, jobs opportunities and connectivity to the rest of the country."
But he said the proposed interchange station would work only if it was linked directly to Leeds station and came with government funding for infrastructure, road and rail links to the rest of the area.
Salford City Council's Assistant Mayor for Transport, Roger Jones, who is also vice-chair of the Transport for Greater Manchester Committee, said: "This is the decision we have been campaigning for over the last 10 years. It is an investment in the future of the local economy.
"Building an HS2 hub in Greater Manchester will help to connect the big cities of the North to each other, and to the South, by bringing travel times down."
Salford Mayor Ian Stewart said: "This decision is great news for Salford and for the wider city region.
"This investment will bring growth, jobs and prosperity to the region that the people of Salford will be a part of."
Record producer and rail enthusiast Pete Waterman, who has has campaigned for HS2 to go to the North-West, said: "Building this high-speed rail link will improve the lives of millions of people. It is a visionary plan to solve our present rail capacity problems and will create fantastic economic opportunities."
The board member of Cheshire & Warrington Local Enterprise Partnership, added: "Railway innovation has always driven economic growth and I believe it will create jobs in the parts of Britain that need them most by linking major northern cities with Birmingham and London.
"There are also the wider benefits, including regeneration around stations, the creation of further jobs indirectly-linked to the construction of the line, inward investment, connectivity of the regions and increased trade links."
Bob Crow, general secretary of the Rail Maritime and Transport union, said: "The modernisation and expansion of rail in the UK is many years overdue and while RMT welcomes any belated investment and development we must not forget that it is decades of political inertia that have left Britain's railways in the slow lane.
"We are miles behind the rest of Europe when it comes to high speed and electrification because our railways have been fragmented and run for private profit rather than as a public service for the past 20 years.
"We must make sure we don't fall for the old political trick of rail staff cuts and high fares today on the promise of high speed jam tomorrow."
Manuel Cortes, leader of the Transport Salaried Staffs Association warned ministers against turning High Speed Two into "a rich man's toy" which will only benefit business passengers.
"We obviously welcome the huge investment in high speed rail travel which will bring much needed economic re-generation to the Midlands and the North of England.
"But we don't want this service to be so expensive that ordinary families will not be able to use it to get around the country quickly and at affordable prices.
"The walk-on return fare between London and Manchester is already eye wateringly high at over £300. We don't want to see just those exclusive high fares on the new line which will make the service solely a rich man's toy.
"Everyone is going to pay for this with higher taxes, so everyone should be able to use it."
Penny Gaines, chair of the Stop HS2 campaign, said: "The Government talks about jobs, and regenerating the North, but in reality, high-speed rail projects elsewhere have sucked jobs to the capital cities, away from the regions. HS2 focuses on long-distance journeys, when the main passenger growth is in regional and local areas.
"Stop HS2 is firmly of the opinion that the whole HS2 project is fundamentally flawed. It should be cancelled as soon as possible, so that we can concentrate on developing the transport infrastructure that will bring more benefits to more people than a fast train for fat cats."
Ms Gaines added: "Again and again with HS2, we've heard talk of 'connectivity', but what it really means is connectivity with London. HS2 is a London-centric proposal that seems focused on extending the London commuter belt beyond Birmingham, when we need to create an engine for growth in the North, providing access to jobs for people who want to live and work in the North.
"Proponents of HS2 don't seem to realise that people can already live anywhere in the UK and telecommute to anywhere else in the world, and before HS2 is due to open, this will be even easier. It's yet another example of outmoded thinking that ignores digital technologies, which will be the real wealth and job creator in the 21st century."
TUC general secretary Frances O'Grady said: "HS2 has the potential to be a game-changer for the UK economy if delivered properly.
"The new high-speed links can create thousands of new jobs and boost regional growth, as well as providing a much needed boost for our construction and manufacturing industries.
"The success of HS2, however, will depend upon the Government developing a plan that provides opportunities for UK businesses and workers, as well as apprenticeships for young people.
"It is also imperative that high-speed rail is affordable for working people and that no-one is priced out of travelling on it."
David Higgins, chief executive of rail infrastructure company Network Rail, said: "A new high-speed network is as essential to Britain's prosperity as it is to the railway. The railways don't just move people and freight; they create jobs, connect economic centres and open up new markets.
"Unprecedented growth in the last 10 years has seen passenger journeys grow by 50% to almost 1.5 billion a year and that number is set to continue to grow. More people use the railways today than at any time since the Second World War, on a network half the size it was then.
"We are already delivering the biggest capacity improvement programme since the Victorian era, but even this is not enough. Without HS2, the West Coast Main Line - our busiest and most economically important line - will be full in a little over a decade. This is a rare chance to stop playing catch-up on capacity. If we get ahead of the game we can create huge opportunities for growth and connectivity."
The preferred line of route and proposed station locations are detailed in a Command Paper published this week, High Speed Rail: Investing in Britain’s Future – Phase Two: The route to Leeds, Manchester and beyond.
See the paper online