Plans to build a rail link between Oxford and Milton Keynes by 2012 moved a step closer to reality today after £2m of Government funding was approved.

The East West Rail Consortium wants to reinstate the line between Oxford and Cambridge through Buckinghamshire.

But it will concentrate first on linking Oxford with Milton Keynes and the £200m scheme will move from the feasibility stage to the design stage.

The £2m will pay for the design work, including survey work and ground investigations along the route.

Linking Oxford and Cambridge by rail is a long-term project after the track was not retained in the 1960s when parts of the network were broken up.

Patrick O'Sullivan, of Milton Keynes Partnership, part of the East West Rail Consortium, said the financial backing meant the 35-minute rail link was on schedule to be opened by 2012.

He added: "As part of the design concept, we need to work out where bridges, signalling and platforms will be built before we move forward.

"Chiltern Railways is also investing in a new route between Oxford and London Marylebone, via Bicester and High Wycombe, which covers a third of our route, so we will work closely with them and that will save a lot of money.

"There will also be a spur down to Aylesbury and the new route will strengthen links between a number of different business communities."

Dick Helling, public transport officer for Oxfordshire County Council, said: "The intention is to run half-hourly services between Oxford and Milton Keynes once the track has been doubled so that trains can run at 90mph.

"Given a fair wind, the Oxford to Milton Keynes line could be opened in two to three years, but a link between Bedford and Cambridge is much more problematic."