Councillors have voted to press ahead with taking trams to Newhaven.
The project was approved after a vote at the full meeting of Edinburgh City Council.
Edinburgh’s tram line is now to be extended from the city centre to Newhaven at a cost of up to £207m.
Supporters of the plan to lengthen the tram line by 2.8 miles (4.6km) say it is needed to match the city’s population growth. But funding concerns have been raised after it was revealed the project’s costs had jumped by 25%.
With approval now granted to proceed with completing the original Line to Newhaven, the project will begin at the end of March with a six-month Early Contractor Involvement (ECI) period where the two contractors will work with the Council and other key stakeholders to finalise plans for construction.
Construction work is set to get under way after the ECI has concluded and Edinburgh Trams are timetabled to take their first passengers to and from Newhaven in early 2023.
It will be funded through borrowing paid back by future tram fare revenues, along with a special £20m dividend from the city’s public bus firm Lothian Buses.
Paul Tetlaw, of transport lobby group Transform Scotland, said: “This will serve a key transport corridor and boost development in the city creating more sustainable travel patterns.
In the UK Nottingham, Birmingham, Manchester and Blackpool are all extending their systems and across the water Dublin is doing likewise.
Edinburgh’s initial tram route has been a great success, it has consistently outperformed passenger projections and there is ample evidence that it has encouraged motorists to leave their cars behind and take the tram into the city.”
Critics remain sceptical about the cost and disruption that will be caused by the tram extension through Leith.
Harald Tobermann, of the Community Councils Together on Trams group, is calling for controlled parking zones along the tram route, claiming this is “key to preventing the tram corridor from turning into Edinburgh’s largest park and ride area”. He added: “We recognise that a strong feeling exists among many people in our communities that this project is being pushed through with undue and unnecessary haste.”
Taking into account lessons learnt in the first phase of the tram project, construction is planned using a “one-dig” approach – closing each work site only once and opening them again only once all works are complete.