The Albanese government's first budget has revealed details of a highly secretive proposal under development since 2020, which will bring together national security and other Commonwealth agencies at a new office complex in Barton.

The federal budget also allocated $86 million for the next stage of light rail and delivered funds to reopen the mothballed AIS Arena, in what Finance Minister and ACT senator Katy Gallagher is hailing as a "good story" for Canberra.

"It's not just about the dollars, it's about working with the ACT government," Senator Gallagher said.

"If we are able to support priorities that they are keen on, then we are going to get a better outcome across the territory."

While funding for the AIS Arena and light rail had either been confirmed or heavily speculated ahead of Tuesday night, there was no forewarning that the federal budget would reveal a major public service project in the works for Canberra.

The proposed precinct - which Senator Gallagher simply referred to as the "Barton project" - would provide a "permanent solution to the critical accommodation and capability requirements" of several national security and other Commonwealth agencies, according to the budget papers.

It would accommodate Commonwealth bodies including the Office of National Intelligence and the Department of Foreign Affairs and Trade.

A new carpark would be built adjacent to the John Gorton Building to support the new precinct, in what's understood would be the first stage of the multi-year project.

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The cost of the project is being kept secret for commercial and national security reasons.

Senator Gallagher was unable to disclose further details, but did confirm that the project would be "significant".

The budget papers revealed that a detailed business case, planning, design work and "early market testing" had started in 2020 under the Morrison government.

Earlier this month, the federal government had promised a "significant" infrastructure commitment for the ACT in the budget, prompting speculation of more funding for the next stage of light rail.

The budget papers confirmed that speculation, allocating $85.9 million to help extend the light rail line from Alinga Street to Commonwealth Park.

The funding is on top of the $132.5 million which had been allocated under the former Coalition government, taking the Commonwealth's contribution to Andrew Barr's signature project to $218.4 million.

The Canberra Times understands the new funding, which is subject to agreement with the ACT government, is spread out over six financial years, starting with $15 million in 2024-25.

The funding announcement comes after Labor walked back a commitment which former leader Bill Shorten took to the 2019 election to invest $200 million in the project.

The federal budget does not include any funding for the project's so-called stage 2B, which will take the tram across Lake Burley Griffin to Woden.

The cash for the Alinga Street to Commonwealth Park stretch is on top of a wider 10-year, $8.1 billion road and rail package.

The long-awaited reopening of the AIS Arena is one step closer after the budget delivered on Labor's promise to spend $15.1 million on much-needed upgrades to the mothballed stadium.

Some $11.6 million has been set aside across 2022-23 and 2023-24 for the works.

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The budget featured a $20 million local infrastructure package for Canberra, which included $5 million for an inner-north cycling route, $10 million toward the new CIT campus in Woden and $5 million to upgrade Gorman House.

A total of $750,000 will be spent on a business case to upgrade the University of Canberra's sporting facilities.

As expected, the budget didn't include funding for projects which former Liberal senator Zed Seselja promised during his failed election campaign, including $15 million to redevelop Viking Park as a 10,000-seat boutique stadium.

There was also no waiver of the ACT's $100 million historical housing debt, as Senator Gallagher confirmed earlier this month.