US Department of Transportation's Federal Transit Administration (FTA) has extended a $900m grant to Metropolitan Transit Authority of Harris County (METRO) to extend Houston's light rail system by an additional 12 miles.
The fund will be used to extend the North and Southeast lines, being carried out at cost of $1.6bn.
North line will be extended by 5.3 miles from its existing endpoint at the University of Houston Downtown to Crosstimbers Street, which will be stretch past the 610 North Loop, while the 6.6-mile Southeast line will stretch from Smith Street in downtown Houston to the Palm Center.
FTA said Houston METRO's light rail service to the north and the southeast is part of the city's plan to connect Houston's workforce with major downtown employment centers, including the Texas Medical Center and the University of Houston.
US Transportation Secretary Ray LaHood said: "The project will improve access to jobs and the region's many attractions, while reducing area congestion, pollution and our dependence on oil."
The new line will add 18 new passenger stops along the way and will also take riders to Reliant Park, Toyota Center, Minute Maid Park, a new major league soccer stadium now under construction, the Museum District and the George R. Brown Convention Center / Discovery Green Park.
Each of the new lines will receive $450m which are currently under construction, along with a third locally funded East End line.
The new light rail lines are scheduled to open for service in 2015, will provide alternatives to congested Interstate 45 and US Route 59.
After completion both the lines are expected to carry more than 58,000 passengers a day including more than 13,000 new transit riders a day, by the year 2030.
The two grants have been provided through FTA's New Starts capital transit discretionary grant process.