Arriva Trains link mid Wales with England on the Cambrian Line

Plans for the single track Cambrian Line include improving or building new passing loops so trains can pass without being held up.

The line will also be raised at Dyfi Junction, near Machynlleth, to prevent flooding from halting services.

The work will be carried out between this autumn and December 2008.

The cash injection in the Cambrian Line, which runs between Aberystwyth and Shrewsbury, Shropshire, has been welcomed by transport groups and committees.

The aim is to improve reliability and punctuality.

The Cambrian Line runs between Aberystwyth and Shrewsbury

Ieuan Wyn Jones, deputy first minister and assembly minister for the economy and transport, said: "I am taking this opportunity to achieve a major improvement to services on this vital rail route between the west coast, mid Wales, Shrewsbury and the West Midlands.

"It's an extremely important communications link for many communities across a wide part of Wales - who will benefit significantly from the results of this project."

Ceredigion AM Elin Jones said her constituents "will be extremely pleased" to hear about the improvements.

Chair of the Cambrian Coast Liaison Conference, Taith (The North Wales Transport Consortium) and Mid Wales Partnership's Transport Group, Coun Trevor Roberts, said the investment would "vastly improve reliability".

Coun Mansell Williams, chair of the Heart of Wales Line Forum, the Shrewsbury-Aberystwyth Line Liaison Committee and the Shrewsbury - Chester Partnership Committee, said the news would be "greatly welcomed" by rail travellers.

The Welsh Assembly Government will spend �8m on the project, while Network Rail will fund the remainder of the money.

Mockery

The news has come as a blow though to campaigners fighting to reopen their village station at Carno, near Newtown, as a passing loop.

Proposals are to build or develop passing areas at Dyfi Junction, Talerddig, near Machynlleth, and Welshpool.

After raising a petition, the Carno group's campaign was due to be discussed by the enterprise and learning committee next month, as part of a new system to give people direct input into Welsh assembly decision-making.

But Tony Burton, chairman of Carno Station Action Group, said the announcement "makes a mockery" of that, but the assembly government said the two matters were unrelated.

Meanwhile, plans for an hourly service on the Cambrian Line, announced by officials last year, are still being considered.