The line closed in 1969 as part of cuts imposed by Dr Beeching
Formal backing for a plan to reopen the railway line between Thornton and Leven has been given by Fife Council.
It has been estimated that it would cost about £20m to reinstate the line and provide a service to Edinburgh.
Tracks and some mechanical equipment, such as signalling, are still in place and would only require upgrading, according to local campaigners.
The authority said reopening the line would help to meet its targets to improve transport to deprived areas.
Chair of the council's transportation committee, Tony Martin, said: "The re-opening of the line to passengers and freight is vital to the regeneration of Levenmouth and Central Fife and is the council's top transportation priority.
"This would improve the image of the Levenmouth area and tackle its perceived isolation; And widen the economic profile and catchment of the area, significantly assisting on its regeneration".
The campaign has been supported by businesses and by the Central Fife MSP Tricia Marwick.
A consultation on the future transport needs of the area has been carried out by the South East Scotland Transport Partnership (SEStrans) and included proposals for a rail link.
The line, which closed during the Dr Beeching era of the 1960s, was part of the branch line around the East Neuk of Fife.