The plans for Cardiff Central involve the construction of access improvements and platforms suited for longer trains.
The Department for Transport said that it was also supporting plans for a new parkway station at Swansea.
The programme of works is expected to knock 14 minutes off the journey between Cardiff and London from December 2019.
Transport secretary Chris Grayling said: “Passengers in Cardiff deserve a modern, accessible station at the heart of their vibrant city centre. This funding has the potential to deliver just that, ensuring more reliable, comfortable and faster journeys into and out of the capital.”
He added: “It is imperative that the two governments in Wales work closely together – in doing so, this strengthens the union and I look forward to receiving the proposals for an ambitious and deliverable business case.”
Secretary of state for Wales Alun Cairns said: “This funding will allow Cardiff to become an attractive tourist and commuter destination at a crucial time in the city’s regeneration. We are also committing to progressing plans for a West Wales Parkway station, which will deliver time savings of up to a quarter of an hour from Pembrokeshire to Cardiff and increase local connectivity around Swansea to provide greater opportunities for the whole of the Swansea Bay City region.”