The Ebbw Vale steel mills were closed in the 1980s
The passenger rail link was shut in 1962, under sweeping cuts made across Britain's rail infrastructure, but will reopen within three years in a £15m scheme.
The project is part of a £76m investment from the Welsh Assembly, which is aimed at regenerating areas affected by the closure of the south Wales steelworks.
Describing the impact of the line's re-opening as "immense", AM for Blaenau Gwent Peter Law revealed the announced link fulfilled a lifelong ambition.
However, both Mr Law and Plaid Cymru AM for south east Wales, Dr Phil Williams, insisted the line should also extend to include Abertillery and Newport.
Six stations
"It will have a huge impact, as having no line has been a social and economic handicap, but we have to keep the pressure up," said Dr Williams, "Getting started is important though."
Mr Law also revealed an application for a second phase to extend the line up from Aberbeeg Junction to Abertillery Town will be submitted immediately.
The Ebbw Vale re-opening involves constructing six new stations at Rogerstone, Risca, Cross Keys, Newbridge, Llanhilleth and Ebbw Vale Parkway.
Since its 1962 closure, the track has been used as a freight line for the Corus steelworks, but needs regeneration - and the new stations - before it can reopen.
Services on the single track line are expected to start in two to three years.
Business incentive
Announcing the link, Minister for Environment Sue Essex said it will make the area so much more accessible.
"It will be a real incentive for businesses to invest in Ebbw Vale and the surrounding area," said Ms Essex.
And Mr Law rebutted claims the link would mean people would leave the area.
"It doesn't mean that people are going to leave - it does allow access to opportunities," he said.
"You have to live in deprivation to understand it, and to get to the capital city 45 miles away gives us employment, educational and social opportunities."
Track extension
The funds for the £15m scheme will consist of £7m from the assembly, and the project is also eligible for Objective One funding.
The track should also be extended to Newport in the future, when Railtrack can replace existing signalling systems.
Mr Law revealed an extension to Abertillery Town from Aberbeeg Junction would cost only an extra £2m, and hoped the track could also reopen, through the old steel works, to Ebbw Vale town station.
In the 1960s, the plant employed 14,500 people, but the steel mills were closed in the 1980s.
A year ago, Corus's decision to shut its finishing plant at Ebbw Vale - with the loss of 780 jobs - dealt a severe blow to the community.
Thousands more jobs were also cut at Llanwern, near Newport, Shotton and Gorseinon, but the isolated position of Ebbw Vale did cause particular concern.