Councillors will be asked to give initial approval to extend the existing 8.7 mile route from York Place in the east end of the city to Newhaven close to Leith harbour.

While a final decision will not be made until autumn 2018, a vote to go ahead at this stage would allow the City of Edinburgh Council to move to the next stage of appointing contractors and working up detailed plans.

It is thought work could start in 2019 with the first trams operating by 2022.

Council leader Adam Mcvey said: “As the fastest-growing city in Scotland, and with our existing system nearing capacity, we have to look at ways of enhancing our public transport system.

“The planned tram extension route takes in Scotland’s most densely populated area. Taken with low car ownership, developing high capacity transport to Newhaven would bring a range of local benefits in terms of boosting economic growth, creating jobs, enhancing accessibility, reducing congestion and improving air quality.

“We’re now working to make sure that the business case is as robust as possible to ensure we have confidence that the project can be delivered on time and on budget.”

A report setting out the business case will go before the city council’s transport and environment committee for approval in principle on 4 September. If granted, the plan will go before full council on 21 September.

A report setting out the business case will go before the city council’s transport and environment committee for approval in principle on September 4.

If this is granted, the case will then go before the full council on September 21.

While the fine details are yet to be released, it is understood the case will include information about the introduction of a business compensation scheme for traders during construction.

It will also set out forecasts for the number of people using the trams, with this figure expected to double to 13 million in the first year if the extension is carried out.

If all goes ahead, it is thought construction would take approximately three years and, allowing for testing, passengers could expect to use the service in the first half of 2022.