The government could take control of the Northern rail franchise in 2020.
According to the Telegraph, government plans for the troubled rail operator include splitting it in two and renationalisation.
The franchise, which provides services across Leeds and West Yorkshire, could be split into North West and North East, senior industry sources have said.
The leaked plans come after months of under its current operator Arriva, part of Germany's national operator Deutsche Bahn.
Northern, which provides 16,000 journeys a week for 15m passengers, could pass into public ownership as soon as March 31.
There has been pressure on the government to renationalise the franchise as a way of tackling months of dire service.
Delays to essential track upgrades and stations, rising fares and the chaos caused by new timetables introduced in May, insufficient staff and strikes have put increasing pressure on the government to take over the franchise.
According to figures from the Office for Rail and Road, just 57% of trains run on time, below the national average of 65%.
Arriva has been ordered to draft plans on how it will improve its Northern service which stretches from Chester to Newcastle and Nottingham to Carlisle.
But in October, Transport Secretary Grant Shapps said the first steps had been taken to renationalise the franchise.
Mr Shapps said: "I consider that it cannot continue delivering in the current delivery method."
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