There will be a short transition, so any passengers should carry on using Virgin Trains East Coast's customer and ticket booking services.
The DfT team will take over once the current contract terminates on 24 June, and will work closely with Network Rail to ensure a smooth transition to the new East Coast Partnership - operating under the brand-new London North Eastern Railway brand.
Those companies have run the lines on a for-profit basis, but the government has been forced to step in when those contracts have failed, and the government-owned Directly Operated Railways ran the East Coast service from 2009-2015.
VTEC is the third private operator to fail to complete the full length of a contract to run services on the East Coast route.
Transport Secretary Chris Grayling is due to confirm later this afternoon that he will bring the line back into public ownership following a string of failures.
Virgin and Stagecoach won the eight-year ICEC franchise in November 2014 and began operating trains the following March under the Virgin Trains East Coast brand.
Stagecoach chief executive Martin Griffiths said he was "surprised and disappointed".
General Secretary Mick Cash said: "This is the second time the Government have called upon the public sector to launch a rescue operation on the east coast main line, and instead of being a temporary arrangement Chris Grayling should listen to his staff and the public and make it permanent".
He said: 'It's important staff and passengers are properly protected while, once again, the transport secretary tries to patch up a failing franchise system that everyone knows doesn't work.
Mr Grayling said the decision had been "very finely balanced" between an operator of last resort and a new, non-profit contract for Vtec.
He expected the majority of the enhanced services planned by Virgin and Stagecoach for delivery by 2023 to be implemented by LNER, although this would largely depend on the ability of infrastructure manager Network Rail to deliver them.
" When it is fully formed the new LNER operation will be a partnership between the public and private sectors".
The government has said that it does not intend to strip Virgin and Stagecoach of the franchising passports which they hold, and thus they would be able to bid for future franchises.
He told MPs the firms have paid a "high financial and reputational price" in relation to the East Coast route.