The East West Rail Consortium (EWRC) is behind a push to open the route, which is designed to link Ipswich, Norwich and Cambridge with Letchworth, Bedford, Milton Keynes, Bicester and Oxford, allowing connections to Swindon, the Thames Valley, south-west England and south Wales, together with a spur to Aylesbury.

The £2million will be put towards an engineering study into the western portion of the line, between Cambridge and Oxford, which it is hoped could be opened by 2012. This section could see the re-opening of a line between Bletchley, the Claydons and Bicester, including a new station at Winslow.

The project is now expected to move to the detailed engineering phase, one step closer to the rail link's construction. It is hoped work on this phase will be completed by October next year.

Around £1million towards the cost will come from Growth Area Funding, given to Bedford Borough Council, Milton Keynes Council, Aylesbury Vale District Council and Oxford City Council. The remainder will come from the Department for Communities and Local Government.

Patrick O'Sullivan, from EWRC, said: "We carried out a study which has given us confidence that it is worthwhile trying to re-open the route.

We have now got to do the design work which can then be used to build and upgrade the railway."