A £270m light rapid transit system linking Fareham, Gosport and Portsmouth will be given the go-ahead this summer.

Approval for the scheme could come by early July according to Hampshire councillor Keith Estlin. He says he has been encouraged by a seven-week ministerial wall of silence over the project.

A new environmental report also reiterates the county council's view that the long-mooted scheme will get the green light from transport ministers, despite contrary reports it was about to hit the buffers.

Construction of the South Hampshire Rapid Transport (SHRT) link could begin at the start of 2005 - a year and a half later than the council wanted.

At a meeting of the Hampshire's Light Rapid Transport Development Panel yesterday, Cllr Estlin said: "We know we are going to get approval for this and we think it is going to be in early July.

"We still have two bidders interested in winning this contract."

The environmental report, which was presented to the panel, stated that the SHRT scheme benefits from strong regional government support.

Two companies bidding for construction rights are anxiously hoping their proposals will meet government spending plans.

Presenting the report, project director Stephen Nicholson said the scheme stands out as being "extremely healthy". He added: "The SHRT project stands up very well. The benefits of SHRT are double the costs and that is very much higher than any other scheme."

The cost of the plan, which aims to remove three million cars a year from the congested M27 and A32, rose from £100m to £290m as insurance premiums rose in the wake of September 11, 2001.

That figure reduced by £20m when a proposed cycle shuttle under Portsmouth Harbour was axed.

Current arrangements see 75 per cent of funding coming from government while the remaining 25 per cent would come from Hampshire County Council and Portsmouth City Council on a 70-30 respective basis.

Preparing sites has cost a total of £9.5m so far and Cllr Estlin says the figure demonstrates how much the county council believes in the scheme.

A second report presented by SHRT project manager Peter Murnaghan stressed the need to develop an SHRT corridor development strategy with a predicted £2m investment in the bicycle and bus links.

Speaking earlier to the Daily Echo, Cllr Estlin reiterated his "extremely optimistic" view.

"We are aware of other bids from Manchester and Leeds.

"The government has given Leeds some bad news and that leaves Manchester and us.

"All the indications are that the government at transport level are favouring our scheme.

"We resubmitted our bid six weeks ago and if the secretary of state for transport had been unhappy then we would have known by now."

Fareham MP Mark Hoban, who has been a keen supporter of the SHRT, was also in buoyant mood.

He said: "I think the county council has done all it can to meet the concerns of government to tackle cost overruns. I think they've done an excellent job.

"One of the things that moved me to support this scheme is that it is the only option that is available to meet the transport problems. It is vital that it happens.

"I'm optimistic.

"I think the government knows the need to support this scheme, this is a primary area for economic regeneration."