Over the next two years hundreds of platforms will be lengthened, new platforms added, new tracks laid, line speeds raised as well as capacity added through major resignalling schemes.
 
The programme marks the greatest investment in the rail network since before the Thatcher government launched off on an agenda of privatisation.
 
Over the past 12 years, annual average spending on such schemes has been around £500m.
 
Network Rail will contribute £1.73bn of the total with the remaining £713m financed by other stakeholders.
 
Work is expected to start this month with completion due for March 2009.
 
Unveiling the plans, Network Rail chief executive, John Armitt, said: "The railway is thriving. Demand for rail continues to grow and today's news outlines Network Rail's response to those demands.
 
"Three million people use the railways each day, more than at any time in the past 60 years, and we're not standing still waiting for the big infrastructure projects to be delivered. We are doing something about it now by moving forward with hundreds of small schemes dotted around the country that will add capacity and ease crowding.
 
"For the first time on record, over £1bn per year will be spent on expanding and growing the railway network. This, more than anything, shows how the needs of today's railway are shifting. We will never lose sight of the imperative to run a safe and reliable railway each and every day, but responding to the challenge of growth becomes a more important priority for the company."