There is now $1.8 billion in government funds available for the $2.1 billion project. There is now $1.8 billion in government funds available for the $2.1 billion project. (City of Ottawa)

The federal government will contribute $600 million toward Ottawa's new proposed light-rail transit plan.

Federal Transport and Infrastructure Minister John Baird, who is also the Conservative MP for Ottawa West-Nepean, made the announcement in Ottawa on Tuesday about funding for the $2.1 billion project. The 12.5-kilometre rail line would run from Tunney's Pasture, just west of downtown, to Blair station in the east, and includes a 3.2-kilometre transit tunnel under downtown Ottawa.

"What this means for the residents of the City of Ottawa is a better transit system and an improved environment," said Baird. "It means more choice and better accessibility and it helps get people out of their cars and into public transit."

The federal commitment is less than the one-third share originally expected from each level of government, but equal to the amount committed by the provincial government in December.

However, the city treasurer has confirmed that the plan remains affordable for Ottawa with that level of federal funding, the city said in a news release. So far, the city has also committed $600 million, meaning there is now $1.8 billion in government funds available for the project.

Mayor Larry O'Brien called Baird's announcement "the final piece of the funding puzzle for a plan that will revolutionize our city’s transit system." O'Brien

Coun. Alex Cullen, chair of the city's transit committee, called the announcement "a significant milestone in bringing Ottawa’s light rail future one step closer."

Cullen said the city is prepared and capable of picking up the difference — about $300 million — between the estimated cost and the available funds.

"If we have to we will, because this project is so important for the future of this city, it's not going to fail because we are short nickels and dimes here," said Cullen.

On Monday, Ottawa city Coun. Diane Deans sent a letter to Baird saying the city was hoping for a federal commitment of $700 million to the project.

City council approved the design for the plan in January.