The link-up of the red and green LUAS lines in Dublin has been approved by An Bord Pleanála.
Work on the six-kilometre city centre link-up will commence next year, creating 800 jobs.
It means services beginning at the Green Line terminal at Stephen's Green will now go all the way to Broombridge in the city's north west, where it will join up with Maynooth train services.
The RPA has welcomed the decision, which will see passenger services on the new link-up operating from 2017.
The eventual route will be named the LUAS Broombridge line.
An interchange with the Maynooth Line will be provided at Broombridge.
A station will be built at the newly sanctioned DIT campus at Grangegorman.
The project is expected to cost in the region of €370m.
The new line will feature 13 stops, offering a journey time of 24 minutes.
It is expected to attract an additional eight million passenger journeys, a 25% increase.
The Dublin Chamber of Commerce said that the project would be a key piece of an integrated public transport network for the region that will benefit commuters, shoppers and tourists.
"The development of this Luas line is a ‘missing link’ for public transport in the region as a whole," said Gina Quin, Dublin Chamber Chief Executive.
"Luas BxD will join the Luas lines but also link the north and south side of Dublin city centre in an important way which will improve life for commuters, shoppers, and tourists.
"When we link up our transport network more effectively, we give passengers greater options on where they can get to in the city and create more value for the public transport network as a whole."
Minister for Transport Tourism and Sport, Leo Varadkar welcomed the decision by An Bord Pleanála.
Speaking today, Minister Varadkar said: "Luas BXD will revolutionise public transport in Dublin. It will deliver a joined up commuter railway network by linking the two existing Luas lines. It will extend Luas into the north inner city to the new DIT campus at Grangegorman and will terminate at Broombridge where it will interchange with the Maynooth line."
"When complete, Dublin will have an integrated rail and light rail network that is the norm in other modern cities.
"For the first time, it will be possible to get a train in Maynooth or Leixlip and get out in Dundrum or Sandyford with just one change.
"Similarly, you will be able to get on the Luas at Tallaght and with just one change, get out at the new DIT campus or at Trinity College.”
"The Business Case for Luas BXD needs to be updated to take into account the changes made by An Board Pleanála.
"However I am confident that the business case remains robust and I expect that the arrangements for advance works and tendering will be finalised as soon as possible.
"This morning I have instructed the RPA to begin work on this immediately with the intention that construction can commence in the near future."