The company has lobbied for almost 10 years for the 300-metre stretch of track to be re-established and speed up rail activity to the port.

It was closed in the 1970s resulting in freight trains having to reverse across passenger lines at Edge Hill to enter or leave the docks in a procedure that takes 40 minutes.

Re-establishing the link would remove disruption for the port and could mean extra traffic for Liverpool's main Lime Street station.

Secretary of State for Transport, Douglas Alexander yesterday revealed that the Olive Mount Chord was one of several projects to be included in the government's productivity transport innovation fund.

It will now be taken forward for business case development and appraisal.

Rail freight accounts for about 6m tonnes of port traffic each year, comprising containers, steel, coal and scrap.

Mersey Docks spokesman Eric Leatherbarrow said today that reopening the link could lead to a doubling of rail freight into the port.

"It is good news forthe port and the environment and community around the port.

"If this project is allowed to go ahead it will enhance rail access to the port and increase capacity to move cargo by rail rather than road.

"With other rail projects we are considering for the portitis likelyto double the volume of rail traffic."

The link was closed in 1970s when the Port of Liverpool and rail travel were both in sharp decline.

But Mr Leatherbarrow said cargo is increasing and greater access to the port can influence the volume of traffic that it attracts.