Four companies will bid for the contract to run trains on the first stretch of railways run by mayor Ken Livingstone, it has been announced.
The Silverlink franchise ends in November 2007
Contracts for the North London Line, now run by Silverlink, and the Tube's East London Line are available.
Govia, MTR Laing, National Express Group and Nedrail have been shortlisted to proceed to the next bidding stage.
Transport for London said it wanted to get the best deal for passengers and all four were strong candidates.
The East London Line, which will close in December 2007 for a £1bn upgrade and extension, is to become the first Tube line to be run by the private sector.
Silverlink Metro services currently operate on the North London Railway, but the franchise ends in November 2007.
Both lines will be important for transport to the 2012 Olympic Games.
TfL's rail boss Ian Brown said: "TfL's vision for rail in London is to put passengers first.
"This is the first milestone in the process to appoint the best operator."
The winning bidder will be announced next spring, and will take over operations in the autumn.
TfL says passengers will benefit from more staff in the stations and trains running earlier and later.