Subject to planning approval, work on the 12km Central Business District (CBD) and South East Light Rail project is expected to start in 2014 and will take five to six years to complete.
The tendering process began last month for the project's two main contracts.
Minister for transport Gladys Berejiklian welcomed the findings about the project to link Circular Quay, Central, Randwick and Kingsford. "The majority of benefit will be to public transport customers - light rail will play a crucial role in addressing the significant congestion challenges we face in Sydney," she said. The project will deliver 10,000 jobs during construction and operation.
An economic appraisal of the project found that light rail would deliver more than AU$2bnn in benefits for public transport users, AU$264 million for road users and environmental and social benefits worth AU$308m. The light rail system will be able to carry up to 9,000 people per hour in each direction, with additional high capacity services to cater for major events.