Plans to transform Birmingham’s New Street Station have received a boost after the Department of Transport green-lighted Network Rail’s £128m funding contribution.

Network Rail’s offering is one of three branches of funding needed for the £550m project to go ahead, and Mike Whitby, chair of the Steering Committee overseeing the scheme, is urging the government to make a swift decision on the two outstanding application for funds.

“This is good news for Birmingham,” he said. “The redevelopment of New Street Station is one of the vital components in our plans for a £10bn transformation of Birmingham City Centre over the next 10 years.

“We warmly welcome the announcement, but it is only a third of what we require. I shall continue to maintain the pressure on government to deliver what they have promised us – a train station fit for the 21st century.”

The plans for the 1960s-built station are hoped to double passenger and train-handling capacity, relieve congestion and create 5,000 jobs.

The Steering Committee has applied for a total of £350m in public money – including the £128m just awarded – and hopes to receive £200m in private sector investment.