Train operator Northern Rail is to be stripped of its franchise, Transport Secretary Grant Shapps said.
“Frustrated commuters will not have to wait long” before action is taken, he told the PA news agency.
The chaotic introduction of new timetables in May 2018 saw up to 310 Northern trains a day cancelled, and punctuality and reliability problems continue to blight the network.
Office of Rail and Road figures show just 55.6% of Northern trains arrived at stations within one minute of the timetable in the 12 months to December 7, compared with the average across Britain of 65.3%.
Northern Rail has an office at Northern House, on Rougier Street in York.
An Arriva company
German-based Arriva holds the Northern franchise, which is due to run until March 2025.
Mr Shapps described services on the route as “really bad” and claimed passengers have “had a nightmare on that line” since 2016.
Asked if Northern will be stripped of its franchise, he replied: “The simple answer to the question is yes, it is going to be brought to an end.
“It’s partially a legal process but frustrated commuters will not have to wait long.”
But Department for Transport officials later clarified that Northern could continue to operate services through a new, short-term contract.
The other option being considered is nationalising services by putting the Government-controlled Operator of Last Resort (OLR) in charge.
This is what happened on the east coast route in June 2018 following the failure of the Virgin Trains East Coast franchise.
German-based Arriva holds the Northern franchise, which was due to run until March 2025.
Mr Shapps first announced in October 2019 that he had issued a request for proposals, which involved asking Northern and the OLR to outline their plans to improve services.
Northern says it has faced unprecedented challenges outside its “direct control” such as major infrastructure upgrades running behind schedule and delays in the building and delivery of new trains.