Transport for the West Midlands (TfWM) has submitted planning documents for a proposed £200 million extension of the Midland Metro between Wednesbury and Brierley Hill.
The seven-mile extension would serve Great Bridge, Horseley Heath, Dudley Port, Dudley town centre, the Waterfront, Merry Hill and Brierley Hill town centre.
Much of the route will make use of the existing, disused South Staffordshire Line. Work to clear the line began at the start of this year.
Authorities in the West Midlands have previously said they hope to begin construction in 2019, with the line due to open in 2023.
The Brierley Hill extension is the latest stage in a much wider programme of works to extend the Midland Metro network.
Councillor Roger Lawrence, lead member for transport for West Midlands Combined Authority (WMCA), said: “This is a major milestone for the Wednesbury-Brierley Hill extension and fantastic news for the people of Dudley, Sandwell and the wider West Midlands.
“Once this link is open it will connect key locations such as Merry Hill and Dudley town centre to the wider transport network for accessing the national rail network and HS2 and, eventually, Birmingham Airport.
“The Midland Metro is key to the WMCA’s plans to grow our economy, and this extension will help bring more jobs and greater prosperity not just to the Black Country but across the region as a whole.”