The European Investment Bank (EIB) has allocated a grant worth £500m for the expansion of Greater Manchester Metrolink network in the UK.
The funds will be used by the Greater Manchester Combined Authority to fund construction of the third phase of the light rail system.
The loan will also finance new trams and additional infrastructure, and will transform tram links across the conurbation.
Upon completion of the project, phase three will deliver a network three times the size of the present system, covering a total of 97km of track with 99 stops, and be served by a fleet of 94 trams.
The project is expected to provide frequent and high-quality transport links through new lines to Oldham and Rochdale town centres, Ashton-under-Lyne in Tameside, East Didsbury, and Manchester Airport, via Wythenshawe.
The authority is also developing a second, additional line across Manchester city centre.
The long-term funded expansion project is expected to be completed in 2016.