The Government says it has no preferred position as yet on the City to Gungahlin Transit Project which is investigating light rail or bus transit options along Flemington Road and Northbourne Avenue.

But Environment and Sustainable Development Minister Simon Corbell, who has issued an update on the project, says something has to be done to ease traffic congestion between the city and Gungahlin.

''Northbourne Avenue is already at capacity. Congestion will continue to increase along the corridor. So doing nothing is not an option,'' he said.

Deloitte Access Economics is conducting a cost-benefit analysis of the options, with its report due to be issued early next year when more public consultation will take place.

Mr Corbell said the City to Gungahlin Transit Project was the Government's No1 priority in a wish-list of projects presented to Infrastructure Australia, the advisory body to the Commonwealth Government.

''We need a strong business case because this is a project that I think, fundamentally, is only going to occur with some level of Commonwealth infrastructure funding,'' he said.

The update suggests a range of scenarios, including that light rail and bus transit technology share lanes along the route.

Mr Corbell said the bus transit vehicles resembled trains inside, with passengers facing each other and more room to stand. There were also doors on either side. The light rail tracks could be recessed in the road to also allow the buses.

The existing Northbourne Avenue median strip could be reduced in width to ''activate the street frontages and allow space for bi-directional cycle paths and improved pedestrian paths''. The option involved the Northbourne Avenue median strip shrinking from 27m-wide to 8m-wide.

''Yes, the median shrinks but the verge increases from the current width of about 7.5 metres to about 13 metres to include dedicated cycle, better pedestrian, better landscaping,'' Mr Corbell said.

''There are other options we will be considering as well. For example, whether or not there needs to be three lanes of traffic as well as a lane for public transport. It [depends] on how much congestion can be reduced by the public transport lane.''

Mr Corbell said in any scenario it was unlikely the median on Northbourne Avenue would remain unchanged. ''Even if the median was kept at its existing width, a very large number of trees would have to be removed to accommodate a light rail line should it be built along that median because the electrical catenary - the electrical wires that run above the line - obviously need to be clear of trees.''

The Government is considering the possibility of light rail and bus transit accessing the Gungahlin Town Centre via Hibberson Street or a loop arrangement to Anthony Rolfe Avenue, closing Hibberson Street to car traffic.

The light rail or bus rapid transit stops would follow the same stopping pattern as the current Red Rapid bus, with additional stops to be considered for areas where there is high patronage potential.

The Flemington Road segment would likely have more widely spaced stops and higher travel speeds, while the higher density Northbourne Avenue section - particularly south of Antill Street - could have closer stop spacing, akin to a streetcar-like stopping pattern.

The update says light rail and bus transit could be located in the median strip along Flemington Road. Cycle paths and wider footpaths are also being considered along the road.

A light rail terminal could be located in the median strip between Alinga and Rudd Street. A bus transit would use the existing bus station.

Mr Corbell said the National Capital Authority had the ultimate say on any project for Northbourne Avenue because it was on national land but the ACT Government would decide on any development along Flemington Road and into Gungahlin.