The UK Department for Transport has conditionally approved a £530.7m fund for the Nottingham tram extension project to add two new tram lines.
The project involves building a new route to Chilwell and Beeston and another to Clifton.
The Chilwell and Beeston route will extend from the railway station to the south west of the city to a new park-and-ride site serving the A52 highway.
The route will cross the Meadows residential area, the ng2 development site, the region's main hospital at the Queens Medical Centre, the University of Nottingham, Beeston town centre and Chilwell.
The Clifton route will extend from the railway station to the south of the city to a new park-and-ride site serving the A453. It will cross the Meadows, Wilford / Ruddington Lane residential area and the Clifton Estate.
The project will also allow easy interchange between tram, rail, bus and taxis at Nottingham station.
The government will fund the project through private finance initiative credits to allow the project's promoter Nottingham City Council to start the procurement process.
The final approval will come after procurement when firm costs are known.
The Council's contribution, £149.5m, will be made through a workplace parking levy. The Council's Workplace Parking Levy Order has been confirmed allowing a two-year delay, until 2012, to collect the levy charges.
The construction is expected to start in 2011 and be complete by 2014.