Ed Miliband is drawing up plans for legislation for a radical overhaul of the railways which could open the door to public sector operators taking over parts of the system if Labour gains power at the next general election.
Labour's National Policy Forum (NPF), meeting tomorrow in Milton Keynes, will discuss proposals for what is being billed as the most far-reaching reform of the rail system since privatisation under the Conservatives in the 1990s.
But the package is unlikely to satisfy those grassroots activists and trade unionists who have been pressing for a return to full re-nationalisation.
The measures are expected to include legislation to create a new overarching body - accountable to Parliament - which would deliver a national strategy for the railways.
It would bring together the track operator, Network Rail, and a new passenger rail body, to co-ordinate passenger operations, manage infrastructure and oversee stations and ticketing.
The scheme is intended to end what Labour says has been the fragmentation of the the rail system under privatisation while delivering cost savings and a better deal for the passenger.
It will also include an overhaul of the system of issuing franchises to rail operators - with party sources indicating there would be "a less ideological approach" to public sector operators.
There will also be a new legal right to the cheapest ticket for passengers, with a simplified fare structure and a cap on annual fare rises on each route.
Labour sources insisted they wanted to go beyond the "private versus public debate" and the party leadership will hope that the measures will be sufficient to head off a row with grassroots activists and unions who have been pushing for a return to full nationalisation.
Even before the details had been officially published, the Rail, Maritime and Transport Union (RMT) - which is not affiliated to the Labour Party - had dismissed the plans as a "cop out".
However a source close to Jon Cruddas, the head of Labour's policy review, said there was "general agreement" across the Labour movement around the package.
"We want to get rid of the Tories' failed franchising model and an ideological obsession which puts privatisation ahead of common sense - without going back to the old days of British Rail.
"Instead, Labour is determined to face up to the need for bigger reforms which meet the challenges facing our creaking transport system in the 21st century.
"The package being discussed by the NPF this weekend goes beyond the public versus private debate. It would deliver a broader, radical reform agenda to save money and stop passengers being ripped off. It would allow us to plan railways that will serve our country as a whole and local communities better.
"Above all, it would put right the mistakes made 20 years ago and put the taxpayer and rail passengers first."
Mick Cash, acting general secretary of the RMT, insisted the only solution to the problems of the railways was full re-nationalisation and he warned of strikes and passenger protests in the run-up to the general election.
"We have only seen vague reports so far on these suggested Labour rail franchising plans but what we have seen looks like a total cop out," he said.
"RMT wants to see the entire rail network taken back into public ownership, closing the door on two decades of greed and exploitation. That position is supported by 70% of the British people.
"No doubt the wealthy train companies would use their cash piles to rig any changes to the franchising system in their favour. The only workable solution is to take the whole lot back under public control."
For the Conservatives, Transport Secretary Patrick McLoughlin said: "This short-term gimmick from Ed Miliband, demanded by his union bosses, will mean more government borrowing, higher rail fares, and worse services for hard-working taxpayers.
"It's yet more evidence that Ed Miliband doesn't have a long-term economic plan to secure Britain's future. It's the same old Labour and it's clearer than ever that Ed Miliband is just not up to the job."