Train passengers in the north of England and Scotland have been promised a "world class" service with the announcement of new contracts for two rail franchises.
The Northern franchise has been awarded to Arriva Rail North and the TransPennine Express route to First TransPennine Express.
Improvements to services are set to include over 500 new carriages, room for 40,000 extra passengers at peak times and more than 2,000 additional services a week, the Department for Transport said.
The 30-year-old Pacer trains will also be scrapped.
Transport Secretary Patrick McLoughlin said the £1.2bn boost to rail services is part of the government's commitment to closing the economic gap between the North and the South.
He said: "We promised passengers a world class rail service that would make the Northern Powerhouse a reality - and I'm delighted that we have found two operators that will deliver exactly that."
McLoughlin added that the proposals from Arriva and FirstGroup went "far beyond our requirements with exciting, ambitious plans that will make a real difference to customers."
TransPennine Express will provide free wi-fi on trains and at stations by July 2018 and Northern passengers will be connected on trains and at 36 stations by December 2019.
The DfT said operators will be expected to meet "challenging targets" to improve customer satisfaction and reduce cancellations and shorter trains, which lead to overcrowding.
Automatic compensation for delays - launched by Virgin Trains in October - will be introduced for season tickets and advance purchase tickets bought online.
Stations will also be given a £55m investment for refurbishments.
The franchises will be jointly managed by the DfT and Rail North, which represents 29 local authorities across northern England.
Ed Cox, director at think-tank IPPR (Institute for Public Policy Research) North, described the announcement as a "vital first step to creating a powerhouse economy".
He said: " The co-commissioning by northern leaders through Rail North and the Department for Transport marks a step change in how the North can shape its destiny. It shows what can be achieved when decisions about the North are made in the North."
But Mr Cox added that between £15bn and £65bn of spending is required to transform the North's transport infrastructure.
The Northern network is the second largest in the UK and operates services across the region.
Under the new franchise, which runs from April 2016 to March 2025, Arriva Rail North will operate a number of new direct journeys such as between Bradford and Sheffield, Leeds and Chester, and Manchester Airport and Halifax.
First TransPennine Express will run intercity services across the region and into Scotland from April next year until March 2023.
They will provide 125mph trains across the network as well as 220 new carriages.
There will be new direct trains from Liverpool to Glasgow from December 2018 and additional services from Manchester to Glasgow and Edinburgh from December 2017.