Mr Shorten is set to make the announcement on Tuesday alongside Chief Minister Andrew Barr and Labor's candidate for the seat of Canberra, Alicia Payne.

Funding for the light rail would be included in Labor's first budget if the party was to win government, and would be part of a suite of policies to create jobs through infrastructure projects.

"Canberra is our nation’s proud capital and we will make sure this beautiful city shines and has the right infrastructure to attract new tourism and economic opportunities," Mr Shorten said in a statement.

"Stage one light rail construction has created up to 1400 direct jobs during construction and light rail stage two will create hundreds more. This commitment ensures the ACT government can continue planning the project knowing it will attract federal support."

Light rail to Woden was estimated to cost between $1.3 billion and $1.6 billion although the route has since changed.

It is more expensive than the first stage owing to the need to run wire-free in stretches, due to the visual impact on the Parliamentary Triangle.

Now light rail is likely to travel around the eastern side of State Circle to get to Woden, instead of snaking through Parkes and Barton.

The shift came after the Commonwealth government tabled its formal response to a bipartisan federal parliamentary committee report which concluded the Barton route would "unavoidably add further complexity, time, and cost to the project".

However the new route is shorter but "not neccessarily" cheaper, Transport Minister Meegan Fitzharris said last week.

Asked which route federal Labor preferred, Mr Shorten's spokeswoman said they were happy for the territory to continue with the detailed design work on the new State Circle route.

Mr Shorten said federal Labor supported the ACT government's "progressive, long term vision for Canberra".

However the funding is not tied to a Labor government being in power in the ACT, although the Liberal opposition has historically opposed the project.

The ACT received federal money for the first stage of the project, but only because it cashed in on the Commonwealth's asset recycling scheme, where states received a 15 per cent bonus for divesting ageing assets.

Nevertheless, the arrangement caused Labor MP for south-western Melbourne seat of Lalor, Joanne Ryan to accuse the federal government of providing Canberra with a "gold-plated tram network" at the expense of her constituents. This was despite Victoria gaining $877 million from the same program.

Mr Shorten said this funding was an example of federal Labor’s determination to work with states and territories to "tackle traffic congestion and create jobs in Australian cities".

"Labor will invest in public transport projects that will make a real difference to people’s daily lives in Canberra and create secure, local jobs," he said.

"Traffic congestion damages the economy by acting as a hand brake on productivity growth. Better public transport takes cars off our roads and makes our transport system more efficient, which in turn sets the scene for stronger economic growth and importantly for local job creation."