More than £50m is to be spent modernising the Tyne and Wear Metro system over the next two years.
The Tyne and Wear Passenger Transport Authority (PTA) said the train service would fail in the next 10 years if it did not get a major overhaul.
The money will be spent on a new station at Simonside in South Tyneside and an upgrade at Sunderland station.
Over the next 20 years more than £600m will be spent on the network and this is the first phase.
The service is used by 39 million passengers a year.
PTA chairman David Wood said: "I am delighted to say we now have funding in place to deliver the whole of phase one of Metro re-invigoration.
"Passengers will begin to see a difference on the Metro by 2010 thanks to this investment."
The cash has come from a number of sources, including the Government, private developers, and the European Community.
Bernard Garner, director general of Metro operator Nexus, said: "We are determined to build on our success by investing money where it is needed on urgently-needed maintenance work and modernisation to meet the expectations of tomorrow's passengers."
The work will include spending more than £14m on 249 new ticket machines accepting coins, notes and cards at all stations, and barriers at 13 stations, funded by a Department for Transport grant.