Mr Matheson said Scotrail will be operated through an arm’s-length company controlled by the Scottish Government, declaring that the current system of franchising “is no longer fit for purpose”.

He said the move will come through “operator of last resort arrangements” after he decided it was not the right time to seek a franchise procurement competition to run Scotland’s railways when Dutch state-owned railway company Abellio ends its control.

An operator of last resort runs the railways in the event that a train operating company is no longer able to do so.

Mr Matheson admitted the Scottish Government had considered keeping Abellio on board after March 2022, but decided it was not in Scotland’s best interests.

Mr Matheson said he could not say how long the operator of last resort arrangements would be in place, adding it was something that will be considered further as the “shape and pace” of rail reform becomes clearer.

He said: “It is high time that the UK Government listened to our requests to place the future structure of Scottish’s railway in Scotland’s hands. The simplest way to do this is to devolve rail powers.

“In the meantime, with the current ScotRail franchise expected to end in March 2022, we need to take decisions about successor arrangements within the current legislative framework. We have for some time been considering the full range of options available under that framework for continuing services beyond the franchise expiry.”

He added: “Following a detailed assessment process and given the uncertainty caused by Covid 19, alongside the continuing delays to the UK Government White Paper on rail reform, I have decided that it would not be appropriate to award a franchise agreement to any party at this time, either through a competition or a direct award.

“That is why I have confirmed that, from the expiry of the current franchise, ScotRail services will be provided in public hands through a company wholly owned and controlled by the Scottish Government. This is in line with our Operator of Last Resort duty.

Mr Matheson confirmed that all Scotrail staff will transfer to the new Scottish Government-owned company with their terms and conditions protected.

He said: “This period of stability will provide a platform whereby we can assess the scale and pace of recovery from Covid-19 and progress options for reform, in particular my preferred model of an integrated public sector-controlled railway.”

Transport Salaried Staffs’ Association general secretary Manuel Cortes labelled the announcement as “long overdue – much like many Scotrail trains were while Abellio was in charge”.

The long-awaited UK Government-commissioned Williams Review of rail industry franchising will form the basis of a UK Government White Paper and reform package that UK rail minister Chris Heaton-harris has pledged to publish “as soon as possible”.

Mr Matheson said its delay had hindered the Scottish Government’s decision-making.