Trams have been running in Blackpool for 120 years

The �85.3m upgrade will bring the network up to 21st century standards and boost regeneration of the area.

Improvements will include refurbishment of the track and tram stops out to Fleetwood, as well as 16 new fully accessible trams.

The trams carry nearly four million passengers per year and the work is due to start in late 2009.

'Local heritage'

Rail Minister Tom Harris said: "At over 120-years-old, the Blackpool and Fleetwood tramway is part of the local heritage as well as an important part of the local transport system.

"I want to make sure that tourists and local people alike can continue to enjoy the tram in years to come and make sure it lies at the heart of the town's current regeneration plans."

The Government has already contributed �11.8m for emergency works to the tram system and its total contribution is capped at �60.3m.

Blackpool and Lancashire Councils are contributing �25m to the scheme.