Labour will next week call for the not-for-profit company running the east coast mainline to be allowed to bid for the franchise as the party shelves discussion of wider rail reform until next year.

Senior Labour figures said they did not want a row over the future of the railways to dominate a conference that is due to focus on living standards and measures to alleviate the pressure on the so-called squeezed middle.

Labour has also not made a final decision on whether to allow the state firms to take over the franchises when they come up for renewal.

Labour has long praised Directly Operated Railways, a government-owned not-for-dividend business and subsidiary of the Department of Transport, set up after National Express abandoned the line, and whose subsidiary, East Coast, operates the franchise.

Labour will also argue that a state not-for-profit firm should be able to bid whenever a franchise comes up for renewal.

The shadow transport secretary, Maria Eagle, said: "The way the east coast services have been run over the last four years can point the way to a different future for our railways.

"What they have demonstrated very clearly is that it is perfectly possible to run a national rail service on a not-for-private-profit basis and deliver a service just as good, very arguably better, than a profit-driven train company," she said. "I think it does point a way to doing things differently."

Directly Operated Railways has returned more than £600m to the Treasury since it started running the line three years ago, and it denies claims by potential rivals, including Virgin, that its performance has stagnated.

Eagle will tell Labour's annual conference that it is absurd that state-backed firms from Germany and France will be allowed by UK ministers to bid for the east coast line, but the successful UK state-backed firm running the line is debarred.

Private firms have twice run the line only to pull out, yet ministers have confirmed that National Express will be free to bid for the franchise – even though it walked away from the line in 2009.

The operator took over the line in 2007 and had been due to run it until 2015, but quit after two years because it was running out of money. Polling suggests only one in five voters favour reprivatisation, with a further fifth undecided.

Eagle will raise the prospect of Directly Operated Railways bidding for other mainline franchises as they come up for renewal, and changing the criteria so that the Department for Transport considers the extent to which bidders plan to reinvest profits in services as well as making payments to the government. She will also propose the re-creation of the InterCity brand, regardless of what mix of private and public operators are delivering services, to provide a more coherent service for passengers – ending variations in peak time and ticket validity between operators, and the waste of repainting trains: a new generation of InterCity trains are due to be rolled out on the network from 2017 after being assembled in the north-east by Hitachi.

Labour said it opposed east coast privatisation and would continue to do so. With the new contract not due to begin until February 2015, a few weeks before the start of the general election campaign, it remains confident that it can derail the planned privatisation – not least because of the chaos in the Department for Transport over rail franchising.

In March the transport secretary, Patrick McLoughlin, announced a rejigged order for rail franchise bids, putting the east coast mainline to the head of the queue. The change in priorities means other franchises will be held for longer by existing owners.

Ministers regard an efficient east coast line from London to Edinburgh as vital to economic renewal of the cities en route.

The case for keeping the line in the public sector was strengthened when figures from the Office of Rail Regulation showed that the line now requires less government funding than any of Britain's 15 other rail franchises, all of which are run by the private sector.

The line has returned £640m to the exchequer by way of premiums since 2009 – £187m in the last financial year. The private train companies made combined profits of £305m last year, despite receiving £51m more in subsidy from taxpayers than they returned in franchise payments.

Lord Adonis, the former Labour transport secretary, has also praised the performance of the east coast line. "In the last four years, East Coast has established itself as one of the best train operating companies in the country, both operationally and commercially.

"This has fundamentally changed the situation and it is right and proper that East Coast should be allowed to continue as a public-sector comparator to the existing private franchises."

Conservative MPs have criticised East Coast's punctuality and said it could not work in the long term.