An £85.3m refurbishment of the historic Blackpool & Fleetwood tram system has been given the go-ahead after Transport minister Tom Harris today confirmed the Government would be giving £60.3m to the scheme.
The upgrade will "bring the network up to 21st century standards and boost regeneration of the area."
The Government is due to announce shortly its response to the extensive Blackpool Task Force report of last year which recommended ways to regenerate the area.
The tram project will focus on track and tram stops out to Fleetwood, as well as 16 new fully accessible trams.
Today's decision means that Blackpool Council can now start detailed planning for the work. Subject to successful procurement of the materials required, the full refurbishment could start in late 2009.
Harris said: "At over 120 years old, the Blackpool and Fleetwood tramway is part of the local heritage as well as an important part of the local transport system.
"I want to make sure that tourists and local people alike can continue to enjoy the tram in years to come and make sure it lies at the heart of the town's current regeneration plans.
"We will continue to work with the Blackpool Council, Lancashire County Council and local MPs so they can deliver a modern tramway that is attractive to passengers and value for money for the taxpayer. I am glad that we are working towards safeguarding the future of this iconic system for future generations."
The Blackpool & Fleetwood Tramway carries nearly 4 million passenger trips a year, around 75% of which are visitors to Blackpool.