The £18m light rail extension is part of a wider Interchange project that is funded by the Black Country Local Enterprise Partnership, City of Wolverhampton Council and the West Midlands Combined Authority (WMCA). Formal approval for the extension was given by Britain's secretary of state for transport, Mr Patrick McLoughlin, and follows a Transport and Works Act Order public inquiry last summer.

Expected to create 1400 jobs and be finished in 2019, the route will take LRVs along Pipers Row, stopping directly outside the bus station before continuing on to the railway station, which will also be redeveloped as part of the Wolverhampton Interchange Project.

The scheme is being carried out by Transport for West Midlands (TfWM), the transport arm of the West Midlands Combined Authority, in partnership with the City of Wolverhampton Council and Neptune Developments.

"Today's approval is excellent news because the extension can play a key role in unlocking further investment and jobs – not just in Wolverhampton but also other parts of the Black Country," says Mr Roger Lawrence, leader of the City of Wolverhampton Council and West Midlands lead on transport.

The Midland Metro currently has an annual ridership of 4.4 million, is 21km long, and has 26 stations with nine more awaiting construction.