The $A 420m ($US 319m) project will be delivered with a $A 270m contribution from the Queensland Government, $A 95m from the Australian federal government, and $A 55m from City of Gold Coast Council.

Minister for transport Mr Stirling Hinchliffe said the preferred contractor had been selected following a rigorous evaluation process and gave an assurance construction will be completed by early 2018 to ensure the trams and integrated public transport system are fully operational in time for the 2018 Gold Coast Commonwealth Games.

"Now we've announced the preferred contractors, early works on the light rail extension will start next month," Hinchcliffe confirmed.

Stage 2 will continue the line beyond its current northern terminus at Gold Coast University Hospital station to an interchange with the heavy rail network at Helensvale station.

The proposed alignment utilises existing road and rail corridors, following the Smith Street Motorway, Gold Coast Rail Line, and the inter-regional transport corridor.