Transport for Greater Manchester has submitted a Transport & Works Act Order application to the Department for Transport, part of the formal process required to secure the legal powers to build and operate the new line, known as the second city crossing.
The new line will pass through St Peter's Square, Princess Street, Cross Street and Corporation Street to Manchester Victoria.
Metrolink says the line is crucial for 'operational resilience'as the network expands threefold with new lines serving Oldham and Rochdale, Ashton-under-Lyne via Droylsden, East Didsbury via Chorlton, and Manchester Airport via Wythenshawe.
Once complete, the number of trams operating through the city each hour will also increase – from 25 currently to up to 45 – and a second line across the city is essential to secure the operational capacity and resilience required to manage the additional services through the city centre.
Cllr Andrew Fender, chairman of the TfGM Committee, said: "The second city crossing is a crucial part of the expanding Metrolink network, which will become the biggest light rail network in the country once all the new lines are completed.
"We will now continue to work closely with Manchester City Council on how best to deliver it, in the context of the major redevelopment and pedestrianisation of St Peter's Square, work starting on the complementary Cross City Bus scheme, and the aims of the city centre transport strategy."
The second city crossing is being funded through the Greater Manchester Transport Fund and will involve a new stop at Exchange Square and a new St Peter's Square stop. There will also be a number of changes to highway arrangements on Princess Street, which have been designed and modelled to fit with a new cross city bus programme.
It is anticipated that work will start on construction of the second city crossing in 2013 for completion in 2016.