Balfour Beatty is to construct a 1.4 kilometre extension of the Midland Metro light rail network into the centre of Birmingham.
The first trams could begin running on the new line as early as 2015.
Balfour Beatty will be responsible for the design, construction, testing and commissioning of the extension.
Centro’s chief executive Geoff Inskip said: “This is a prestigious project in the heart of Birmingham which demands a construction partner of the calibre of Balfour Beatty.
“We worked with Balfour Beatty last year when they built the Metro bridge for us over Great Charles Street. That was a clear demonstration of their proven track record in delivering projects on budget and on time.”
The Midland Metro extension is one of three major rail projects in the city. Billions is already being invested in the redevelopment of New Street station and HS2 will see a new high-speed rail interchange built in the city.