The steep gradient from State Circle to Adelaide Avenue could pose a technical challenge to the new route under consideration for the second stage of Canberra's light rail.
Transport Canberra is doing more analysis of a potential State Circle alignment, after ACT Chief Minister Andrew Barr revealed the government was looking at ditching the Barton dogleg of the city to Woden route.
This includes looking at whether the light rail should go east or west around the circle.
The eastern route is slightly longer than the western route, although an ACT government spokeswoman said there could be advantages to either alignment in terms of Commonwealth planning processes, journey times and access to workers in Barton.
There are also some technical challenges about how the rail runs past Parliament House.
"Our preliminary investigations on a State Circle alignment show that the tracks would need to move from the median of Commonwealth Avenue down to State Circle without interfering with the Commonwealth Avenue ramp up to Parliament House," she said.
Authorities must also work out how the tracks are brought from State Circle back up to Adelaide Avenue, with "significant gradient issues" in this location.
"The gradient from State Circle to Adelaide Avenue is very steep. This could possibly be mitigated by flattening the grade at Adelaide Avenue or transitioning between State Circle and Capital Circle at Canberra Avenue," she said.
"The curvature of State Circle also makes the placement of stops challenging, and could impact on the symmetry of the road scheme.
"We will now do more work to analyse these technical questions in much more detail.
The government spokeswoman said while the State Circle alignment had some technical challenges that would need to be worked through, any route would have problems to overcome.
"Stage one had a number of challenges, including the removal of trees, land use impacts and noise from construction works, as does the potential stage two route through Barton," she said.
"The most important factor is how we approach these challenges, with our focus on how we can deliver light rail to Woden as quickly as possible."
The Barr government announced in April the Barton route, which runs past Old Parliament House, was their preferred way to take light rail from Civic to Woden.
However State Circle became a live option, after a federal parliamentary committee found that cutting across the Parliamentary Triangle would lead to time delays and cost blowouts in getting the project approved.
The committee pointed to State Circle as a potential way forward, as the alignment is marked as an inter-town transport corridor in the National Capital Plan.
Mr Barr said while Barton was still their preferred route he would not allow "perfect to be the enemy of good", and State Circle was the "path of least resistance" in getting the project approved.
State Circle was also looked at as part of a consultant's report on options for light rail stage two, however a Capital Circle alignment - which sits inside State Circle - ended up being one of two options put out for a public vote (the survey found nearly three-quarters of respondents preferred the Barton route).
However the government is pushing forward with both options for now, and will refer both the Barton and State Circle routes to the federal environment minister under the Environment Protection and Biodiversity Conservation Act likely early in the new year.
The minister then has 20 days to decide whether a formal environmental impact assessment is required.