A £127 million scheme to expand and improve the West Midlands tram network has been given initial funding approval by the Government.
The announcement by the Department for Transport was described as an important step forward for plans to extend the Midland Metro through the centre of Birmingham.
Planning permission has already been granted for the one-kilometre extension, which will link Birmingham New Street with the city's Snow Hill railway station.
The joint project between Centro, the region's transport authority, Birmingham City Council and the Black Country councils, will also see the introduction of larger trams and longer platforms at existing Metro stops.
A new £9 million viaduct has been built near the Snow Hill terminus as part of the project, which will see tram lines pass through Upper Bull Street, Corporation Street and Stephenson Street.
Mike Whitby, the leader of Birmingham City Council, said: "Metro is just the latest piece in the jigsaw, which when complete will see the total overhaul of how transportation works in Birmingham.
"Metro will play a key role in making the city more accessible to residents and even more attractive to global investors."
Neville Patten, the leader of Wolverhampton City Council, said: "This is fantastic news that will provide a major boost to the whole region."
The Midland Metro currently runs on a 12-mile line between Snow Hill, West Bromwich and Wolverhampton.