The UK Department for Transport (DfT) has approved plans to build the Tinsley Chord to allow the first tram-trains to run in South Yorkshire.
Earlier this year, Network Rail (NR) and the South Yorkshire Passenger Transport Executive (SYPTE) submitted a joint Transport and Works Act Order (TWAO) application to the secretary of state for transport to build the new section of the railway.
The project will see construction of 150m of new track in South Yorkshire to connect existing rail and tram networks.
Overhead lines will also be built to power the tram-trains and a small building created to house lineside equipment.
The Tinsley Chord is part of the Tram-Train pilot project, which is a partnership between the DfT and NR, Northern Rail Limited, SYPTE and Stagecoach Supertram.
Network Rail area director Andrew Penny said: "It’s good news for people in Sheffield and Rotherham that our application has been successful.
"Network Rail is investing record amounts in improving the UK’s railway through our Railway Upgrade Plan and this scheme will give us and our partners a really valuable insight into the potential that tram-trains have to improve services for passengers in future."
NR has not confirmed when the work will start, but it is expected to be completed in eight months.
When the project is completed, the European-style tram-trains will be able to run between the country’s rail and tram networks for the first time and will provide a direct service between Rotherham Central railway station, Parkgate retail park and Sheffield city centre.
The £60m tram-train pilot project was announced in May 2012 and was intended to begin operation this year.
The project was reportedly delayed due to complications in adapting the heavy rail network for tram-train operation.
SYPTE executive director Steve Edwards said: "We welcome approval of the TWAO for Tinsley Chord.
"The tram-train pilot will provide a boost to the regional economy, thanks to improved local connections, and has the potential to open the way for Tram Trains to be introduced in other parts of the UK."