The Legislative Council of the Hong Kong Special Administrative Region has approved the controversial HK$66.9bn ($8.6bn) high-speed railway to link the city with China's high-speed rail network.
The approval had been delayed twice due to opposition by activists who felt the project was too costly.
Expected to finish by 2015, the railway is one of ten infrastructure projects that the city government plans to help boost the economy.
The 140km 350kmph express railway will link Hong Kong to the Chinese city of Guangzhou and is expected to cut the Hong Kong-Beijing travel time by two thirds to eight hours, the Hong Kong-Guangzhou travel time to 48 minutes and Hong Kong-Shenzhen travel time to 14 minutes.
According to the government, the railway will save the Hong Kong public 40 million hours per year and generate an annual economic rate of return of 9%.
Officials say that the construction is now expected to begin as soon as possible.