Railway lines serving the South Wales Valleys will be electrified after a deal was struck between the Welsh Government and the UK Government over financing of the project.
The UK Government will fund the upgrade of the Swansea to London mainline by 2018 at a cost of £850m, and will put £125m towards electrifying the Valley lines.
It was also announced that responsibility of the Welsh rail franchise had been handed to the Welsh Government.
The deal follows a lengthy row over who was to pay for the railway upgrade.
First Minister Carwyn Jones welcomed he deal and said: “I am delighted we have been to able to come to an agreement on the funding for this very important project. This deal will deliver electrification all the way from London to Swansea and enable us to move forward plans to modernise the Valleys Lines at no net cost to the Welsh Government.
“Together with an agreement to fully devolve power over the Welsh rail franchise this will allow the Welsh Government to move forward with its ambitious plans to create the efficient and reliable rail service Wales needs and deserves.”
Journey times from both Merthyr Tydfil and Treherbert to Cardiff would be reduced to a little over 50 minutes when the lines are electrified.
Prime Minister David Cameron said: “I am delighted to announce today that we are going to press ahead with the electrification of the Valley Lines. After years of neglect, this part of Wales will finally get the infrastructure it needs with faster, more modern, more efficient trains and the impact will be huge.
“Spreading the employment opportunities from Cardiff and out to the Valleys and helping hardworking people from all parts of this great nation to get on. This has only been possible because of the UK government and shows our long-term economic plan in action and working for the people of Wales.”
In order to make this deal happen, the UK government will take over sponsorship and fund delivery of the Cardiff-Bridgend section of the Main Line electrification scheme to Swansea – worth £105 million, and contribute £125 million towards the costs of the wider Valley Lines electrification scheme.
The Welsh Government will take over sponsorship and delivery of the Valley Lines project.
Mark Langman, route managing director for Network Rail Wales, said: “Electrification will transform the railway in South Wales, making journeys faster, more reliable, greener and quieter.
“An electrified railway will also help support economic growth by creating jobs and boosting the supply chain when work is undertaken, as well as providing a building block for future growth. It will help reduce journey times and boost commuting opportunities, making Wales a better place to do business.”
Lindsay Whittle, Plaid Cymru AM for South Wales East, said: “Electrification of the Valley Lines will bring a step change in rail travel on the South Wales Valleys and lead to an increase in passengers.
“I recall at the Caerphilly by-election 46 years ago, the Plaid Cymru candidate Phil Williams calling for electrification – it has been a long time coming.
“Commuters and leisure passengers have had to put up with old rolling stock so the deal between the Welsh and UK Governments is to be welcomed and I look forward to electrification finally being delivered. I do hope that the Valleys network will see new electric trains provided and not cast-offs from another area of the UK.”