On a visit to the region, Theresa May will back the 11km long extension while unveiling a £1.7bn plan to improve transport links between prosperous city centres and struggling suburbs.
The Government’s new Transforming Cities fund is designed to address weaknesses in city transport systems and includes £250m for better transport in the West Midlands.
The 11km-long Wednesbury to Brierley Hill Extension will run largely along a disused heavy rail corridor.
It will deviate from this corridor to access Dudley town centre, Merry Hill and the terminus at Brierley Hill. The route includes 17 stops, including four provisional stops.
The four-year project is due to get underway by May 2019.
Ahead of the announcement Transpor secretary, Chris Grayling said: “We have already seen the impact of better integrated transport links for both passengers and the local economy in cities like Nottingham and Manchester.
“This new fund will enable more English cities to reap these benefits, helping to deliver the opportunities and ambition of the Industrial Strategy across the country, as well as driving forward the Northern Powerhouse and Midlands Engine.”