Brazil's Ministry of Cities, which is financing investment in the city's public transport network, had recommended switching modes for the project, which was previously due to be completed in 2016-17.
The federal government, which had pledged Reais 800m ($US 402m) towards the Reais 1.1bn project, argues BRT will cost less and serve at least four districts of the city.
The light rail line would have served the southern part of the city, connecting Dom Pedro II to Via Dutra, and was forecast to carry nearly 215,000 people per day
