UPDATE: 10.54am

Plaid Cymru’s shadow Economy and Transport Minister, Rhun ap Iorwerth AM said he welcomed the devolution of the rail franchise, saying "for the first time, Wales will be able to choose who operates its own railway. This is something that our party has underlined the importance of for several years."

On electrification, he said: "Previous Secretaries of State appeared to want Wales to pay the full cost of Valley Lines electrification. They have rowed back on this and have reached a deal.

"The deal itself is a good step in the right direction but it still appears to leave control of rail infrastructure in the hands of Westminster. We would prefer to see both franchising and infrastructure in Welsh hands so that they can be planned together, and will continue to press on that issue."

UPDATE: 10.54am

Blaenau Gwent MP Nick Smith has celebrated the news that a deal on electrification of the Valleys line has been done.

The Labour MP said he had been campaigning since his election for constant improvements to the Ebbw Vale to Cardiff route.

He said: “This hugely successful link is a life line from the Valleys to good jobs on the coast, so it's important the service is modernised.

Countering Tory claims that The Welsh Government and Labour were to blame for the delay in electrification, he added: "The UK Government had cast doubt over the development after denying in March 2014 that they had made any promise to pay for the scheme.

"But after negotiations with the Welsh Government they will now put £125m towards the scheme, putting it firmly back on track."

UPDATE: 10.43am

Commenting on today’s deal to electrify rail track in the South Wales valleys, Welsh Conservative Leader Andrew RT Davies AM, said the news was "hugely welcome" that will boost the Welsh economy, create jobs and secure growth.

He added the announcement was "more proof of a Conservative-led UK government putting Wales first and investing in our communities."

Welsh Conservative Shadow Minister for Transport, Byron Davies AM, added: "This deal will have a hugely beneficial impact on the lives of tens of thousands.

"Labour didn't electrify an inch of rail track – and their mistakes and lack of attention to detail led to the circumstances preceding today’s solution.

UPDATE: 00.03am

THE First Minister has welcomed a funding deal for electrification of the London to Swansea railway line and the Valleys lines.

It comes after a dispute between the Welsh and UK governments over who should pay.

The UK government will put £125 million towards electrifying the Valley Lines, while funding of £850 million will be used to upgrade the Swansea-London mainline by 2018.

The work will mean inter-city trains calling at Newport and Ebbw Valley services will be electrified.

Carwyn Jones said: “I am delighted we have been to able to come to an agreement on the funding for this very important project. This deal will deliver electrification all the way from London to Swansea and enable us to move forward plans to modernise the Valleys Lines at no net cost to the Welsh Government.

“Together with an agreement to fully devolve power over the Welsh rail franchise this will allow the Welsh Government to move forward with its ambitious plans to create the efficient and reliable rail service Wales needs and deserves.”

Transport Minister, Edwina Hart, added: “Today’s announcement is the result of a great deal of hard work and co-operation between the Welsh Government and The Department of Transport.

"Electrification of the mainline will be a massive step forward in creating a modern train service that is capable of meeting future demand and supporting economic growth. Upgrading, electrifying and improving the Valleys Lines is vital to our ambitions for delivering the South Wales Metro.

"I also welcome the decision to hand over control of the Welsh rail franchise to the Welsh Government, for which I have long argued is necessary to ensure we can create a train service that is suitable for Wales.”