The eastern leg of HS2 has been scrapped and plans for Northern Powerhouse Rail have been downgraded, Grant Shapps has confirmed.
The transport secretary told MPs that a new £96bn Integrated Rail Plan for the north and the Midlands will instead deliver "faster" train journeys both earlier and cheaper than the original HS2 plans would have done.
But a senior Tory criticised the government for "selling perpetual sunlight" and delivering "moonlight" for people in the North of England.
Unveiling the new plan in the Commons, Mr Shapps confirmed that the eastern leg of HS2 will no longer go all the way to Leeds. It will instead stop in the East Midlands near Nottingham.
Plans for HS2 were originally meant to connect London with the city centres of Birmingham, Manchester, and Leeds.
The transport secretary told MPs a new £96bn rail plan will instead deliver three high-speed lines – HS2 Crewe to Manchester, Birmingham to East Midlands Parkway, Warrington to Manchester – but not HS2 to Leeds or Northern Powerhouse Rail Leeds to Manchester.
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Justifying the revised project, Mr Shapps said it "will bring benefits at least a decade or more earlier", adding that under the original scheme, HS2 would not reach the North until the early 2040s.
"We will provide a journey time of 33 minutes from Leeds to Manchester, a significant, a very significant, improvement," he told MPs.
But Conservative chairman of the Transport Select Committee Huw Merriman told the Commons the government's new plan "compromises some fantastic projects that will slash journey times and better connect our great northern cities".
Labour's shadow transport secretary Jim McMahon described the government's new plan as a "great train robbery", adding that ministers have "betrayed" the north.
He accused Prime Minister Boris Johnson of breaking a promise to build the entirety of HS2 made "60 times" in the past few years, telling MPs: "We were promised a Northern Powerhouse, we were promised a Midlands Engine, to be levelled up. But what we have been given today is a great train robbery."
Mr McMahon said most of the £96bn rail investment Mr Shapps confirmed is not "new money" and therefore amounts to "crumbs off the table".
"He promised the North would not be forgotten. He hasn't just forgotten us – he's completely sold us out!", the shadow transport secretary added.
And Labour former minister Hilary Benn accused ministers of leaving a "huge big hole in the middle" of the North of England.
But Mr Shapps said the new "landmark" integrated rail plan is an "ambitious and unparalleled programme" to overhaul inter-city links across the North and the Midlands and said work will start "by Christmas".
"This new blueprint delivers three high-speed lines. First, that's Crewe to Manchester Second, Birmingham to the East Midlands with HS2 trains continuing to central Nottingham and central Derby, Chesterfield and Sheffield on an upgraded mainline. And third, a brand new high-speed line from Warrington to Manchester and to the western border of Yorkshire – slashing journey times across the north," the transport secretary told the Commons.
He also insisted that the new plans will "speed up the benefits for local areas".
Mr Shapps added that it is "wrong" to say the government is just "electrifying the TransPennine route".
"What we're actually doing is investing £23 billion to deliver Northern Powerhouse rail and the TransPennine route upgrade, unlocking east-west travel across the north of England," he told MPs.
"So, in total, this package is 110 miles of new high-speed line, all of it in the midlands and the north. It's 180 miles of newly-electrified line, all of it in the midlands and the North."
The government will "study how best to take HS2 trains into Leeds", Mr Shapps said.
He also confirmed £360m to reform fares and ticketing with the rollout of contactless pay-as-you-go ticketing to 700 urban stations, "including 400 in the North".
Northern political leaders had warned the government will pass up huge economic benefits and betray promises to voters if, as expected, it cancelled the eastern leg of HS2 and a new Manchester-Leeds line.
The Northern Powerhouse Partnership said the cuts, which will see upgrades on the existing trans-Pennine line, will save just £4bn, and short-change commuters and businesses.
"Watering down Northern Powerhouse Rail for the sake of only 10% of the overall original budget of £39bn is unforgivably short-sighted from the Treasury," said director Henri Murison.
He added: "We won't be hoodwinked into believing we're getting £96bn for a transport revolution in the North."