Plans show work would last about four and a half years

Transport Secretary Ruth Kelly made the announcement on Tuesday when she unveiled a government White Paper.

Plans to transform the look of the run-down station, at a cost of �550m, were announced in February 2006.

Birmingham City Council leader Mike Whitby welcomed the news but called for a swift decision on two further funding bids necessary to meet project costs.

Stratford-upon-Avon and Wolverhampton stations are also likely to be among 150 stations upgraded across the country.

Economic growth

Under the plans, the look of the New Street station will be improved by opening up the interior and bringing in natural light, while platforms will be extended to accommodate longer trains.

It is hoped the re-developed station will act as a catalyst for economic growth and development in the region, creating an estimated 2,200 to 3,200 jobs in the process.

We warmly welcome today's announcement, but it is only a third of what we require Mike Whitby, Birmingham City Council New look for 'ugly' New Street

Longer trains could relieve overcrowding while the station's capacity will be increased by 50%.

Building work is expected to begin in early 2009 and finished by 2015, providing the full costs of the project are met.

Key congestion points on the West Midlands rail network would also be improved, raising capacity on peak hour services into Birmingham by 26%.

Mr Whitby said: "The redevelopment of New Street is essential for Birmingham. To be a global city we must have world-class transport infrastructure that serves both our visitors and the local community.

"We warmly welcome today's announcement, but it is only a third of what we require.

"I shall continue to maintain the pressure on government to deliver what they have promised us - a station fit for the 21st Century city."

'Busier than Gatwick'

He added that he was "confident of further announcements" later in the year.

Martin Chambers, Network Rail's programme director for New Street said: "Every year more people use New Street Station than Gatwick, equating to twice as many as originally planned.

"Network Rail has made redeveloping New Street station a top priority in our plans for the national rail network and we welcome the government's commitment to this vital project."

Ms Kelly said: ""Passengers in the West Midlands want not only more capacity and reliability on their trains but also more modern stations, simple and efficient ticketing, quality of service and value for money.

"They're right to be so demanding and this strategy can deliver what they want - as our spending on Birmingham New Street shows."