Greater Manchester Integrated Transport Authority has asked the Department for Transport for permission to close the Mosley Street Metrolink stop to prevent congestion as tram services increase.
DfT will now launch a consultation on the plans that will end on 9 February 2011.
The application follows a report to the Authority's Capital Projects Committee earlier this year. The Capital Projects Committee report details the operational issues that additional tram traffic from the £1.4bn Metrolink expansion will bring to the city centre.
The study shows that if all future services stop at Mosley Street, trams would "bunch" in the city centre and services across the network would constantly be affected, leading to delays.
Mosley Street is served by 15 southbound trams an hour. This will increase by 10 when the first phase of new lines are operational, with more to follow in the second phase of the expansion.
To date, 62 new trams have been ordered to serve the new Metrolink lines currently under construction, which will take the fleet to 94 trams.
Both the St Peter's Square and Piccadilly Gardens stops were widened and improved last year, so they are already able to accommodate passengers who currently use Mosley Street.
Cllr Keith Whitmore, chairman of GMITA's policy and resources committee, said: "A great deal of consideration has gone into this proposal and we are confident that it offers real benefits."