The council has supported proposals that could see passenger train services travel to Bedlinog and Trelewis.
Caerphilly County Borough Council is working with Merthyr Tydfil County Borough Council as part of the SEWTA Rail Strategy 2013 plans. It has commissioned a further study into extending the line up to Dowlais Top.
The line between Ystrad Mynach and Bedlinog is currently used by freight to take coal from Ffos Y Fran open cast mine to Aberthaw power station.
The Cabinet agreed to support and promote the scheme and recommend the Welsh Government considers the proposals along with other rail priorities for South East Wales.
Cllr Tom Williams, Caerphilly County Borough Council’s Cabinet Member in charge of transport, said: “This scheme offers numerous benefits for communities all along the suggested route, and the council is fully supportive of these proposals at this stage.”
The support comes as the new Welsh Secretary, Stephen Crabb, met with the UK Transport Secretary in an attempt to end the row into who should pay for the electrification of the Valley lines.
Mr Crabb held talks with his cabinet colleague, Patrick McLoughlin, on July 22 – the day after Prime Minister David Cameron defended the UK Government’s position.
The Department for Transport claim the Welsh Government should pay but First Minister Carwyn Jones and his ministers argue it is Westminster’s responsibility.