The Hamilton-to-Auckland rail service has been given the go-ahead with funding of more than $90 million announced today.
Transport Minister Phil Twyford said the money would allow the project to make headway in the middle of next year.
It will start with two morning and two afternoon four-carriage trains, which can carry 150 passengers.
Mr Twyford said the bulk of the funding would come from the New Zealand Transport Agency and $12 million from local authorities.
The initiative aimed to give commuters between Hamilton and Auckland a choice, rather than having to take the car, he said.
The service will leave Frankton in Hamilton and then stop at The Base in Rotokauri before going onto Huntly and finally stopping in Papakura in Auckland, where passengers can change onto the Auckland Public Transport Network.
Future stops of the service may include Te Kauwhata, Pokeno and Tuakau.
Waikato local bodies have welcomed funding, saying work on facilities could now start.
Hamilton City was focusing on improvements to the Frankton rail station and building a transport hub at Rotokauri.
Waikato District Council would look at upgrades for the Huntly rail station and KiwiRail would improve carriages, including wifi and ticketing.
Waikato Regional Council chairperson Alan Livingston said the Auckland and Hamilton metropolitan areas could double their population in 40 years - and motorways alone would not cope.
"It's vital we establish and continue to improve passenger rail connections to relieve pressure on our roads and provide capacity to grow.
"We've heard from commuters they're currently driving in stressful traffic conditions for long periods of time in the early mornings and evenings. Taking fatigued drivers off the road is going to make it safer for everybody."