The grant will be drawn from the government’s new £1.7bn Transforming Cities Fund, which aims to improve transport links and promote local growth within city regions.
The 11.2km line will branch off Midland Metro’s existing Birmingham - Wolverhampton line at Wednesbury, serving Great Bridge, Horseley Heath, Dudley Port, Dudley town centre, and Merry Hill shopping centre. Much of the route will use the alignment of a disused freight line.
Construction is due to begin in 2019 and the line will open in 2023. Services will operate at six-minute headways during the peak and every 10 minutes at other times with a journey time of 24 minutes between Wednesbury and the terminus at Brierley Hill Town Centre.
In September the Department for Transport agreed to contribute £59.8m towards Midland Metro’s £149m Edgbaston extension.