Other UK cities have already brought in tram systems

MSPs on a Holyrood committee agreed that the bill, which is being promoted by the city council, should proceed to the next stage.

They said the scheme seemed to have the potential to bring "transport, socio-economic and environmental benefits" to the economy.

However, concerns were also voiced over fears of a financial shortfall.

Edinburgh City Council is proposing to create two tram lines, with one forming a loop from the St Andrew Square to Leith, Granton, Haymarket and Princes Street.

The committee believes that trams can bring real and practical benefits to Edinburgh Bill Aitken Convenor

A committee was created to examine the proposals for a second line, from Princes Street to Newbridge via Edinburgh Airport.

Its report recommends approval of the general principles of the bill, which is being promoted by the local authority.

It also identified areas where further work was required and said that the council had promised to give the committee updated information on a range of issues, including the financial package.

The committee's deputy convenor, Jeremy Purvis MSP, said: "We do have some outstanding concerns about a possible financial shortfall and the projected passenger numbers for the scheme.

"We expect to return to these issues if the parliament is required to make a final decision on the bill at final stage."

Traffic congestion

Convenor Bill Aitken MSP said: "Providing sustainable transport options to support and enhance the competitive advantage of the capital is important and the committee believes that trams can bring real and practical benefits to Edinburgh."

The committee recommended that the bill should now move to the consideration stage, where MSPs will look at the detail of the proposals and take evidence.

More than 80 objections to the bill have been lodged.