The scheme, which has now been granted full Government approval, will include new trams, replacement track, extra stops and a new tram depot.

This investment - £68.3m from the Department for Transport and £33.4m from Blackpool Council and Lancashire County Council - will build on the current regeneration of the town whilst improving access to the Fylde Coast.

In his first visit since becoming Transport Minister, Sadiq Khan said:

"This scheme will deliver significant benefits for the local community, and I am delighted that one of my first tasks as Transport Minister is to give it the go ahead.

"Trams have been running in Blackpool for over 100 years - I hope this funding will mean the historic, world-famous Tramway can continue to run well into the future."

The Tramway, which is owned by Blackpool Council, has been operating since 1885. It runs from the town along the Fylde Coast into Lancashire, serving Cleveleys and Fleetwood.

Leader of Blackpool Council Councillor Peter Callow said:

"This is a great day for Blackpool and we are very grateful to the Government for supporting our ambitions. Blackpool has a fantastic tram heritage and this funding will ensure that our tram network has a great future too."

Work is due to start in June 2009 and be completed in April 2012.