A £1.7m government grant is to help restore a disused section of railway line which will link the Port of Liverpool with the West Coast mainline.
The improved rail links will mean increased business at the port
The renovation of the Olive Mount Cord will also increase the number of trains allowed to use the port.
Transport Minister Rosie Winterton, who visited the port, described the announcement as a "win-win" situation.
Frank Robotham from Peel Ports Group said the scheme was a "vital" component of the port's expansion.
Mr Robotham said: "With Liverpool handling an average of 15 trains in and 15 trains out a day, the capacity of the existing rail link is now limited.
"The re-opening of the Olive Mount Cord will provide essential additional freight train capacity to secure the long term prospects for further expansion of rail traffic to the benefit of the port and its customers."
Rosie Winterton said: "It will help the economy and the environment and ease congestion on the roads - it is a win-win situation."