Auckland's long awaited light rail project will run from Wynyard Quarter to Mt Roskill before surfacing and running alongside SH20 to the airport.
Watch the announcement here:
The government says its chosen route was the option recommended by the Auckland Light Rail Establishment Unit.
Three options were presented to Cabinet last year - the scrapped options being a route completely above ground along Dominion Road, and a route completely underground.
Light rail to Mount Roskill within four years and then to the airport within 10 years was one of the first campaign promises then-opposition leader Jacinda Ardern made in 2017.
The selected 24km route will see transport available every five minutes from up to 18 stops and will be able to carry 15,000 passengers per hour at peak times.
Minister for Infrastructure Grant Robertson said "We have deliberately chosen this option for Auckland Light Rail that will integrate with other major infrastructure projects across Auckland, like the additional Waitematā Harbour crossing, the Auckland Rapid Transit Plan and Kāinga Ora Large Scale Projects".
"We will look to a range of financing options and the cost of this will be spread over a number of years, but they have to be taken. These are harder decisions than the easy way out of a cheaper option."
Inevitably, there would be some more borrowing over a long period of time, Robertson said.
He said the government was still looking at the breakdown of value capture and other ways the government can find support for the project.
"We recognise the government will take on the lion's share of this investment and we will do that not only through the revenue raised via petrol tax and through the national land transport fund but also but looking at how we genuinely look after future generations."
Minister of Transport Michael Wood said the government was committed to safe cycling and walking access along the corridor leading into the stations,.
Travel times would be cut by up to half and it would take 32 minutes to get from the city centre to Māngere, he said.
"The introduction of light rail is particularly significant for South Auckland, for committees that live there who have been underserved for transport options for too long and experienced real transport poverty."
A quarter of Auckland's growth within its current boundaries could be accommodated along the corridor with the light rail investment, he said.
"Our current population is 1.7 million people and it's projected to reach 2 million in the early 2030s.
"For too many decades we have failed to plan decisively and invest in infrastructure that our growing city needs."
The light rail plan was a vision that reduced sprawl and emissions, Wood said.
He said tunneled light rail enabled a more flexible alignment of the route and set the stage for future network integration, as well as avoiding construction on Queen Street.
The public sent a strong message to "get on with it", he said.
"Today's announcement is about future-proofing Tāmaki Makaurau, making life better for the people who live here today and the generations to come"
Wood said the government had also brought forward planning for an additional Waitematā Harbour crossing and public consultation will begin this year, with a preferred option to be selected in 2023.
"To kick the can down the road could either preclude a second crossing from being a possibility in the future, or require what will be established transport infrastructure to be reconstructed meaning additional costs," Wood said.
"The Northern Busway is growing by 20 percent a year and will run out of capacity in 10-15 years, so new transport options for the future are needed, and the planning must begin now. This decision alongside the City Rail Link means that we can now ensure rapid transit to the north as well as the south, east and west."
To address future disruption, the government would this year design a support package alongside business, Wood said.
"We are making a commitment to businesses in the area that significant disruption will be addressed through a comprehensive package, including direct financial support."
Auckland mayor Phil Goff said without the government's contribution there would not be a way to address the city's three problems; congestion, transport emissions and the need for high-quality, compact housing.
"Today's announcement, I think, is the most important transport project that any government has embarked on for the future of our city."
Goff said the problem was not crossing the harbour, but the congestion that people faced once they reached the city.
"Without such a network, the continued population growth in this city will result in a city that will become gridlocked and unliveable."