The Toronto Transit Commission has approved a proposal to replace old streetcars with a new fleet of light-rail vehicles.

The proposal to buy 200 new light-rail cars over the next 10 years was given the green light at a meeting Wednesday, but still needs city council approval.

The new fleet would cost $1.5 billion, but TTC general manager Gary Webster said that's the same amount it would cost to overhaul the existing fleet.

"If you refurbish your fleet all you are doing is maintaining your current quantity of cars," said Webster. "You have no cars for ridership growth."

TTC vice-chair Joe Mihevc said the move puts Toronto in a "league with what the most progressive municipalities are doing around the world."

The sleek light-rail vehicles would be larger, quieter and lower to the ground, making them wheelchair accessible.

The TTC plans to phase in the new fleet over the next decade, with the first 50 new streetcars running in five years.

At Wednesday's meeting, the TTC also approved the preliminary 2007 budget numbers. The commission faces a $33.5 million shortfall in its $1-billion 2007 operating budget.

Commissioners said they either need financial help from the city and provincial governments or there will have to be a fare increase.

The commission said a fare increase would be the last resort in attempts to balance the books.