Chief Minister Andrew Barr says Prime Minister Scott Morrison gave him an encouraging endorsement of light rail stage two, supporting the timely approval of the project.
It came as the government began contract negotiations for stage 2A of light rail after Cabinet approved the business case.
Stage 2B of the project - which will run from Commonwealth Park to Woden, via the Parliamentary Triangle - will require significant approvals from the federal government.
These include passage through both houses of Parliament, environmental approvals and National Capital Authority approvals.
The ACT government is yet to secure any Commonwealth funding for the project, dealt a blow by the re-election of the Coalition government.
Labor had promised $200 million if elected.
Mr Barr said he raised the light rail project with Mr Morrison at the recent Council of Australian Governments meeting.
He said Mr Morrison gave "firm assurances" the governments would work together to overcome the regulatory barriers to delivering the project through the Parliamentary Triangle and onto Woden.
"I welcomed the Prime Minister's positive comments reaffirming his support for the timely approvals of stage two of light rail in Canberra," he said.
"This endorsement is encouraging, and it will certainly help the ACT meet the project delivery timeframes and create more jobs in the Territory.
"This project also benefits the Australian government by enhancing the value of its land holdings and providing convenient access to its facilities by both visitors and government officials."
Mr Morrison's office did not respond to a request for comment.
Mr Barr and Transport Minister Chris Steel on Tuesday revealed Cabinet had approved the business case for the 1.7km light rail stage 2A from Alinga Street station to Commonwealth Park.
The business case was released publicly, but expected costs of the project were redacted.
The government says, for commercial reasons, key financials will only be released when contracts are finalised.
Commercial negotiations with Canberra Metro have now formally begun.
The government says it expects to sign contracts by mid next year.
The stage 2A extension of the current network will add three new stops at City West, City South and Commonwealth Park.
The new section is expected to add about six minutes journey time each way.
Any contract signed could also require a new stop to be built at Mitchell, which sits on the Gungahlin to city line.
London Circuit will also be raised to the same level as Commonwealth Avenue, which the government says will provide a southern gateway for the CBD.
The ministers said it would enable better walking, cycling and public transport links between the CBD and the Acton waterfront.
Work on the stage was expected to begin any time from late next year to early 2021, depending on the approval process with the federal government.
The line would not be ready to take passengers until about 2024.
"This provides a once in a lifetime opportunity to connect London Circuit with Commonwealth Avenue at the same level, providing an access point for a light rail line but also to provide better connections for walkers and cyclists through the waterfront," Mr Steel said.
Mr Steel foreshadowed significant disruption to commuters and businesses during the construction stage.
He said consultation with businesses around the city west precinct had already begun.
Stage 2B would link Commonwealth Park to the Woden Town Centre once approvals were granted.
When complete, the City to Woden journey is expected to take 25 to 30 minutes and include 13 stops.
16 new structures would need to be built, including eight bridges, and 16 new light rail vehicles bought.
The government is predicting stage 2A will add an extra 2500-3000 passengers a day within the first operating year. It also expects the City West stop to be one of the most popular stops on the system.