Pitched six years ago, the development of the 213-kilometre Monaro Rail Trail along the disused rail corridor between Queanbeyan and Bombala has inched another step closer after the latest funding announcements.

The Snowy Monaro Regional Council has allocated $90,000 for planning of the 24km Bombala to Jincumbilly and 10km Nimmitabel to Maclaughlin River sections and Queanbeyan-Palerang has allocated $50,000 for the 24km Tralee to Williamsdale section. The funding follows a 2017 decision from the council to withdraw its support.

Pitched for shared use by cyclists and walkers, the mammoth rail trail project would involve pulling up thousands of old rails and replacing the surface to connect Bombala to Canberra.

A feasibility study conducted in 2019 found it was likely to add an extra $25 million to the Monaro economy, with 75,000 people expected to ride the complete trail each year.

Queanbeyan-Palerang Council chief executive Peter Tegart said further planning was required to help the two shires and the ACT government understand how the trail would be constructed and operated.

"The MRT proposal is to have a trail head [park and ride] on the rail corridor adjacent to the commercial centre planned for the new residential suburb of South Jerrabomberra," Mr Tegart said.

"This gives residents in those new suburbs immediate access to an amazing off-road recreation facility suiting the needs of walkers, runners and cyclists."

He said discussions with the current ACT government had indicated it was keen to integrate the ACT cycle path network with the rail corridor, probably at Hume and a point further south for easy access by Tuggeranong residents.

Mr Tegart said north from Hume the trail could utilise the existing Woods Lane, a service lane adjacent to the rail corridor running from Hume to Harman and Canberra Avenue.

He said several running and cycling groups had advised a rail trail would allow them to safely put on events.

Monaro Rail Trail Inc spokesperson Ken Lister said the recently developed Tumbarumba to Rosewood Rail Trail had been "a phenomenon" for the region's tourism industry.

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Mr Lister said Bombala had traditionally had a similar reliance on the timber industry as Tumbarumba and the rail trail could assist in diversifying in a similar way.

"Since the rail trail opened there three years ago, eight more businesses have opened up in Tumbarumba," Mr Lister said.

"It's breathed new life into the town."

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