Network Rail is to stop using private contractors to maintain Britain's railways.
Seven people were killed in the Potters Bar crash
The work is to be taken in-house, a decision which will affect seven contracting firms and more than 18,000 workers.
Network Rail chairman Ian McAllister said the move would ensure "greater consistency of maintenance standards and help deliver efficiency savings more quickly than would otherwise have been possible".
"We have studied the implications in great detail and concluded that it is the right thing to do," he said.
There has been growing criticism that contracting out maintenance work had been inefficient and was jeopardising safety.
Commentators have described the move as the biggest reorganisation of the way the railways are maintained since they were privatised.
Some may even suggest it effectively means a return to the days of British Rail, when a single workforce was responsible for the upkeep of track and signals.
The move was greeted with delight by unions and passengers' representatives, although the Strategic Rail Authority warned it should not be viewed as the first step towards renationalisation.
The change means that more than 18,000 track workers will be transferred from their current jobs to new positions at Network Rail.
It will affect Britain's biggest engineering companies, including Balfour Beatty, Carillion, Amey and Amec, which carry out the day-to-day upkeep of the rail system.
The companies' share prices were lower in early trade on Friday, with Balfour Beatty down 5p at 202p, Amec off 4.25p at 254, and Carillion sliding 19.5p to 152.5p.
The move will delight some of the industry's biggest critics - especially the rail unions, who have long argued that splitting up British Rail and passing its work on to private contractors has been inefficient, and detrimental to safety.
But big track replacement projects, such as the modernisation of the London to Glasgow line, will still be contracted out to the private sector.
The news was welcomed by the Association of Train Operating Companies (ATOC), which represents the firms running passenger train services.
"This is a daunting task, but under the circumstances we think it's the right thing to do," ATOC director general George Muir told BBC News 24.
Bob Crow, the left-wing leader of the RMT union, hailed the decision.
He told BBC Radio 4's The World Tonight: "It will be far better now, with people coming to work dedicated to one company, not working for one contractor one week and the next for another. You will see the dedication being put back into the industry.
"It's good news for the travelling public and it will be a lot safer as well."
Mr Crow has previously called for the full renationalisation of the railways.
Two weeks ago one of the biggest contractors, Jarvis, pulled out of rail maintenance citing "reputational problems" and lower than expected profits.
The firm is under investigation over its maintenance of the track at Potters Bar, where an accident claimed the lives of seven people last year.
On Thursday, more than £60m was wiped off Jarvis' stock market value after claims that the engineering firm falsified documents relating to rail upgrade work.
The 16% fall in the company's share price followed news that Network Rail is investigating the company over allegations that records of substandard rail upgrades were falsified.
In a statement, Jarvis vehemently denied any wrongdoing, saying it took the allegations extremely seriously and was investigating them.
Jarvis denies there has been any falsification of any paperwork and insists the final paperwork has not been received by Network Rail.
During the cold weather of the past week Network Rail has found there are major question marks over the quality of work done over the summer to upgrade the west coast main line.
A 40-mile segment of track between Stoke-on-Trent and Macclesfield had areas where the track had been laid incorrectly - not stretched to the right degree.
And Network Rail has had to introduce 20 temporary speed restrictions which have slowed trains and caused delays.