Edmonton Mayor Don Iveson is hopeful a new federal infrastructure fund can help pay for the southeast LRT.
Prime Minister Harper announced details on the $14 billion New Building Canada Fund yesterday.
The federal government has clearly heard that the LRT is Edmonton's top infrastructure project, Iveson said.
"Transit projects are eligible for a third or half of the funding to be applied so this is very very encouraging," he said. "There are some other details we're still working though but it looks like we have a measure of confidence today that we're going to be able to put our application in for southeast LRT."
The new building fund was first announced in last year's budget.
Cities have been waiting for over a year to find out if they qualify for the federal money, which will start flowing at the end of March.
The proposed southeast expansion of Edmonton's LRT line is short about $515 million.
The city has committed $800 million to the $1.8 billion cost of the project.