Transport for Greater Manchester is to order 20 new trams from manufacturer Bombardier and propulsion supplier Vossloh Kiepe for delivery by 2014.
Transport leaders agreed to replace 12 of the 32 original T68 trams with the new yellow-and-silver M5000 vehicles in September last year – and they have now agreed to replace the rest. Metrolink is 20 years old this year.
The vehicles cost £2m each and funding will come from borrowing and costs saving relating to more efficient maintenance.
The Transport for Greater Manchester Committee will oversee the investment on behalf Greater Manchester Combined Authority.
Bombardier and Vossloh Kiepe are already supplying 74 new M5000 trams to serve the existing and expanding network – with new lines to Rochdale train station, Droylsden & Ashton-under-Lyne, East Didsbury, Oldham and Rochdale town centres and Manchester Airport & Wythenshawe all well underway – and to replace 12 of the T68s.
Cllr Andrew Fender, chairman of the TfGM Committee, said: "This decision signals the end of one chapter for Metrolink and the start of a new one. Our T68 vehicles were the first of their kind in the UK and served the first modern light rail network of its kind in the country.
"The arrival into service of our first new vehicles in December 2009 demonstrated just how far the industry has come in that time and it is clear that our T68s no longer live up to the standards that passengers expect. The time has now come for them to enter a well-earned retirement.
"The new Bombardier trams have delivered significant improvements for passengers and I'm sure regular users of the network will welcome this announcement and the benefits it will bring to the services they depend upon."
A total of 26 T68s served the original line – Altrincham to Bury – and a further six came into service in 2000 when the Eccles line opened, taking the total fleet to 32. The first new M5000 entered service in December 2009.
Following the launch of the South Manchester line to Chorlton and the expansion to Oldham Mumps, around 25 M5000s are now in service on the network every day – just over half the in-service fleet.
Once all the new lines are in operation, the network will be served from a pool of 94 new M5000 trams.
The M5000s are up to four times less likely to develop a disruptive fault than the T68s, which reduces maintenance costs.
As they are 10 tonnes lighter, they will also reduce energy costs and prolong the life of existing rails by several years, which will reduce the long-term costs of track renewals and prevent greater disruption for passengers.
The phased 'retirement' of the T68s began in November 2011, with the order to replace an initial 12 vehicles. This initial phase should be complete by the end of summer this year.
A plan to phase out the remaining T68s and introduce the new M5000s will now be developed with the operator, MRDL.
TfGM is an executive body of the Greater Manchester Combined Authority. Transport policies that affect the ten districts of Greater Manchester are set by the Combined Authority.