The brakes are finally set to come off planning for the next leg of Canberra's light rail, after the Commonwealth tabled its formal response to a federal parliamentary committee report.

The report warned the ACT government's chosen route through Barton would "unavoidably add further complexity, time, and cost to the project".

Instead, the Joint Standing Committee on the National Capital and External Territories said the ACT government should use the routes already laid out in the National Capital Plan for intertown public transport, specifically State Circle.

If the territory still chose to take light rail through Barton and the Parliamentary Triangle, the committee said there should be a more complex approvals process, recognising the national significance of the area.

The federal government agreed or agreed in principle to each of the committee's six recommendations, which also included that designated areas of light rail be wire-free to minimise the visual impact on the parliamentary zone.

Assistant Minister for Regional Development and Territories Sussan Ley said the recommendations provided "clarity" for the project going forward.

“Following the tabling of this report, the Australian Government encourages the National Capital Authority and the ACT government to continue working together to ensure that the proposed route for the project is consistent with the National Capital Plan," Ms Ley said.

“Canberra is more than just a city; it is home to some of the nation’s most significant institutions and buildings and is filled with examples of our heritage and national identity. That is why it is so essential that the unique character of the nation’s capital is preserved for all Australians."

A spokeswoman for Transport Minister Meegan Fitzharris said: "It’s great to see the Commonwealth Government giving guidance and support to stage two of light rail from Civic to Woden."

"We welcome the Commonwealth’s approach to the heritage of the parliamentary zone, noting that heritage is something the ACT government is determined to maintain and enhance in the area," she said.

"We look forward to working with the Commonwealth government, the National Capital Authority and the Canberra community on the best way to deliver light rail to Woden as soon as possible."

The bipartisan joint standing committee report from October said concluded the National Capital Plan could be considered as "in-principle" approval for light rail routes, and following that would mean the project could be approved faster.

The plan allows for an intertown public transport system along Kings and Commonwealth Avenues and State Circle but not across the Parliamentary Triangle, like the ACT government's preferred route does.

But at the time, Ms Fitzharris said the government would still pursue a route through Barton even though obtaining approvals would be more complex. Her officials said the Barton dogleg had been endorsed overwhelmingly through a public survey and travelled past more cultural institutions and workplaces.

However ACT Chief Minister Andrew Barr later said he would not allow "perfect to be the enemy of good" in getting the project approved, opening the door to a "compromise" route using State Circle.

Mr Barr said his government would make a final call once the federal government published its response to the joint standing committee report.

They kept both options alive by preparing Environment Protection and Biodiversity Conservation (EPBC) Referrals for both routes, a requirement for the project to proceed.

But the delay in the federal government response meant they had to postpone much of the planning work. Documents tabled last month in the assembly showed $4.8 million of consultancy work had to be postponed due to the uncertainty around the Commonwealth's reply.

The State Circle option was strongly backed by the ACT Property Council and the Woden Valley Community Council, although the Public Transport Association of Canberra felt the long term benefits of light rail would have been better realised with the Barton route.

However, the State Circle route is not without its challenges.

The steep gradient from State Circle to Adelaide Avenue could be a problem, early analysis has shown, and the curvature of the road also makes the placement of stops challenging.

It's also unclear whether the light rail would travel east or west around State Circle on that prospective route.