The London to Edinburgh line has been run by a joint venture between Stagecoach and Virgin, for the last three years.
"I plan to use a period of Operator of Last Resort control to shape the new partnership".
It is the third private operator to fail to complete its full term in running services on the route.
"So on the same day we will start with the launch of a new long-term brand for the East Coast Main Line through the recreation of one of Britain's iconic rail brands, the London and North Eastern Railway, the LNER".
The decision to end the £3.3 billion contract this year has been described as a "bailout" by Labour and trade unions.
Perth-based Stagecoach, which has a 90 per cent stake in the franchise, angered MPs by announcing the decision minutes before Mr Grayling made a statement to the House of Commons.
Stagecoach said on Wednesday that the government had scrapped the contract, three months after Transport Minister Chris Grayling said he was considering taking back control of the line which it has run since 2015.
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Stagecoach Group said its understanding was that the announcement does not directly affect other franchises and bids for franchises in which the company has an involvement.
Stagecoach pledged to "work constructively with the officials and the OLR in the weeks ahead to ensure a "professional transfer to the new arrangements".
He added: "However, we respect the Government's decision".
Anthony Smith, chief executive of the independent watchdog Transport Focus, said: "Whichever organisation runs East Coast services, under whatever new arrangements, passengers will be looking for the quality of current services to be maintained and built on".
Trains on the East Coast Mainline will gradually transfer to LNER branding from VTEC branding.
"In all circumstances ownership of the infrastructure will remain in the public sector, but the railway is at its strongest when it is a genuine partnership between public and private". The company also has already funded its full GBP165 million loan commitment to the East Coast franchise.