The cost of building the next two Metro lines in the West Midlands has risen by 74 per cent.
The bill for the Birmingham city centre and the Wednesbury-Brierley Hill lines has leapt from an estimated £212 million in 2002 to a forecast £369 million when the lines, if approved, are constructed between 2008 and 2011.
However, project backer Centro believes it has a strong case for Government funding that could provide at least a 150 per cent return on the investment from Whitehall, local councils and businesses.
Centro officers said the cost increase was down to an estimate of inflation in 2011 and a number of "tweaks" to the scheme required after a public inquiry into the city centre line, which concluded nearly two years ago.
Centro director general Rob Donald said: "There is no major construction scheme in the UK that does not increase in price year-on-year.
"The business case we submit early next year will clearly show how the benefits far outweigh the cost of construction and that we are confident this will satisfy Government criteria."
Officers believe the plan will overcome problems encountered by Liverpool, Leeds and other cities in securing Government funding for light rail projects.
They say even allowing for the cost increase, the project will show a cost-benefit ratio of between 1.5 and 2 when the business case is submitted to the Department for Transport early next year.
Privately, Centro officers are confident it will be towards the higher end of that scale.
The Government requires a ratio of at least 1.5 to trigger Government funding, which will make up 75 per cent of the total cost.
Councillor Gary Clarke, chairman of the Passenger Transport Authority, which sets Centro policy, said: "The West Midlands would benefit by considerably more for every £1 invested.
"And what is particularly excellent news for us is that, when you add in developer and local contributions, the Government would be getting a minimum double return on its investment - £1.50 of benefit for every 75p it invests."
The remaining 25 per cent contribution, which the Government requires to be found from local sources, has already been earmarked.
The lion's share will be funded by the developers of major sites that will be served by both nine-mile routes.
The leaders of West Midlands city and borough councils have agreed for the remaining balance to be financed from "prudential borrowing".
A report to next week's meeting of the PTA outlines steps taken to minimise financial risk. Councillors are also being asked to approve the replacement of existing Midland Metro trams.
Centro believes replacing all the trams would save money compared with waiting for the mid-life refurbishment of the existing vehicles, due in 2010.
The city centre extension has only recently progressed to the stage of a final business case being put together, after Birmingham City Council dropped its desire to divert the line into underground tunnels.