Proposals for a new rail link between East Anglia and the south midlands have taken a major step forward – 40 years after they were first suggested.

The East-West Rail Consortium has announced a preferred route for a new line to be built between Cambridge and Bedford, enabling the completion of the rebuilding of the Varsity Line to Oxford which was closed following the publication of the Beeching Report in the mid-1960s.

Eventually the route is expected to incorporate the lines from Cambridge to Ipswich and Norwich, allowing passengers to complete new cross-country journeys without having to go through London.

The Consortium was set up in 1995 after the plans were first drawn up in the early 1980s and has already reopened the freight-only line from Oxford to Bicester and is currently upgrading the route from Bicester to Bedford via Bletchley. That is due to open in 2023. The new line should be completed by 2030.

Consortium chair Mark Shaw said: "The Central Section between Bedford and Cambridge has always been the most challenging part of planning East West Rail, given that - unlike the section west of Bedford - it requires a completely new route.

"This announcement ensures the momentum established by the East West Railway Company is maintained and we will continue to work closely with them as they look to secure detailed planning consent and get trains on tracks at the earliest opportunity."

CBI Regional Director for the East of England Richard Tunnicliffe said: "Today's news about a recommended route for the East-West rail route is a landmark step in the project. The CBI welcomes the government's commitment to the East West Rail route between Oxford and Cambridge. This project will help level up the whole East of England linking us up from Reading to Norwich.

"Completing this work is utterly essential to ensure we level up the regions, and businesses in the OxCam Arc welcome the opportunities this line will provide, with access to new skills, widening market access and building on the innovation that makes this region a world leader.

"There is a lot of work left to go to today is a real day for celebration as this vital piece of infrastructure will help unleash the full economic potential of the region."