More than 900 jobs are set to be created as part of a £4.5bn contract to build 596 new railway carriages.
As part of the project a rail maintenance depot is set to be constructed in Doncaster.
Agility Trains, a consortium made up of Japanese firm Hitachi and UK builder John Laing, will construct a new factory in County Durham.
New maintenance depots will also be built in Bristola and Swansea.
The new factory is expected to create 730 jobs, a further 200 jobs during construction phase and many more in the supply chain.
The government has been in negotiations about the details since Agility was made the preferred bidder in 2009.
The 92 new trains will run on the East Coast main line in 2018 and Great Western main line in 2017.
Construction at the Newton Aycliffe site is expected to begin in 2013 and will be fully operational by 2015. The first IEP trains will enter revenue-earning service on the Great Western Main Line in 2017 and on the East Coast Main Line by 2018.
Click here to see video: Intercity Express Train CGI from Hitachi Rail Europe