The decision to appoint the surprise candidate Tom Winsor, 41, was seen as recognition that raising investment rather than capping profits of the railway industry was a priority.
He was selected ahead of Chris Bolt, who had filled the post temporarily since December. Mr Bolt set out his credentials last year when he warned Railtrack that he would cap its profits by pounds 100m a year unless it was prepared to take more risks. Railtrack had warned that this meant it would be able to borrow pounds 1bn a year less on the money markets.
Mr Winsor, who will take over on 5 July, will have the task of reviewing Railtrack's investment programme.
"This is the second of three key rail appointments which look to the future of the railway industry," said the Deputy Prime Minister John Prescott.
The first key appointment was that of Sir Alastair Morton as chairman of the British Railways Board and also boss of the shadow Strategic Rail Authority. The third appointment, that of a new director of Passenger Rail Franchising, will be announced shortly.
On Thursday, Railtrack is toannounce a pounds 27bn investment in Britain's railways over the next 10 years. The first Rail Regulator, John Swift, was critical of the rate of Railtrack investment when he held the regulator's position from 1993 until the end of 1998.
Mr Winsor has been working at the Office of the Rail Regulator since 1993 - first as chief legal adviser and then as a general counsel to the regulator working on reorganisation, restructuring and regulation of the rail industry.
Shares in Railtrack surged two per cent on yesterday's news. One City analyst said: "The only goal that Chris Bolt had was to beat up a few shareholders."Reuse content