In the next four years residents and commuters using Manchester's Metrolink will be able to travel as far as Oldham, Rochdale and Chorlton as part of the planned increase.
The government has pledged£244m towards the total cost of the scheme as part of its final allocation of the£520m it dedicated to transport improvements across Greater Manchester in 2004. The additional£138m cost of the programme will be met by the Greater Manchester Passenger Transport Executive .
'Huge difference' to transport
Ms Kelly said: "These much-anticipated improvements will make a huge difference to local public transport, and are expected to carry an extra 10 million passengers a year."
The programme will also include upgrades to disused rail routes for the trams to run on, as well as the installation of new track and new stops.
The extension to Oldham and Rochdale will be approximately 23km long and will include a conversion of Oldham's existing Loop rail line to the Metrolink.