Manchester's Metrolink tram system will be extended to Droylsden, Rochdale and Chorlton, it has been announced.
The total cost of the Metrolink expansion is an estimated £900m
Secretary of State for Transport Douglas Alexander has confirmed the new lines will go-ahead.
Plans to extend the lines further to Ashton-under-Lyne, Wythenshawe and Manchester Airport are still on hold.
The original plan for three lines out to the airport, Rochdale and Ashton-under-Lyne were frozen in July 2004 because of escalating costs.
The estimated cost of the Metrolink original plan was £900m - but the government said it would not provide more than £520m.
The funding released by the government on Thursday is the final part of that £520m budget.
£202m of the cash has already been invested in developing the Metrolink extensions.
Now the government will release the remainder of money pledged and GMPTE will put up the rest of the cash needed - around £300m.
£13.5m has also been pladged to improve traffic management technology in the Greater Manchester area and help tackle congestion.
Work can now go ahead on new lines heading north as far as Rochdale railway station; east as far as Droylsden; and south as far as St Werburgh's Road in Chorlton.
The city united to get the plan 'back on track'
Mr Alexander also said the track on the line between Bury to Altrincham would be replaced.
And eight new trams are expected to begin operating during 2009.
He said "The Metrolink matters to Manchester. To build on it is something that the Manchester travelling public want.
"We have been working closely with Manchester Passenger Transport Executive and the local authorities to deliver a tram that is value for passengers and the taxpayer."
The expansion of the system, dubbed The Big Bang, was announced in 2000 and homes, schools and offices were demolished in some areas to make way for the new lines.
GMPTE has been lobbying the government to increase its share of the funding.
A £102m package of improvements to the existing system was agreed last year.
Phase three of the Metrolink expansion is being implemented in two stages.
The first phase will extend the network to Oldham and Rochdale, Droylsden in Tameside, and Chorlton in south Manchester.
GMPTE want to fund the full extension of the network, in a planned second phase.
The second phase of the expansion would take Metrolink into Oldham and Rochdale town centres as well as to Ashton-under-Lyne, East Didsbury and Manchester Airport.
Leader of Manchester City Council Sir Richard Leese said: "It is crucial that we have rapid, effective public transport, so that our economy becomes even stronger, helping local businesses and families to prosper and to thrive.
"Good public transport ensures that people from all over the city region can contribute to and benefit from our success."