The UK Secretary of State for Transport Grant Shapps has given his approval for the work on the second phase of East West Rail to begin.
Last year, the East West Railway Company proposed five route options for a rail line between Bedford and Cambridge.
In 2018, Network Rail submitted plans to develop the second phase of the East West Rail project.
The government formed the East West Railway Consortium in 2017 to develop the direct rail connection from Oxford to Cambridge.
This rail project will link localities and businesses between Oxford and Bedford, and Milton Keynes and Aylesbury.
Two trains in each direction every hour will serve the Oxford-Milton Keynes route. The Oxford-Bedford route will have one train each direction per hour. The Milton Keynes-Aylesbury route will have one train an hour in each direction.
This rail line will mark the first direct rail connection between the four cities in 50 years.
It will also link the Great Western main line, Chiltern main line, West Coast main line and Midland main line.
Phase two of the project involves major track and signalling upgrading works between Bicester and Bedford, Aylesbury and Milton Keynes.
Work also includes the rehabilitation of the railway line between Bletchley and Claydon Junction.
The consortium has already completed phase one of the East West Rail link between Oxford and Bicester.
Network Rail’s North West and Central Region managing director Tim Shoveller said: “Building a new railway would transform connectivity and journey times across the heart of the country.
“East West Rail promises to provide a greener, low carbon transport system which will bring huge benefits to passengers and businesses, driving economic growth and creating opportunities for housing and new jobs.”