The project would run between Armidale and Glen Innes and is expected to cost in the order of $19.8 million.

An Armidale Regional Council (ARC) spokeswoman said the application was made in March for 100 per cent of the costs.

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"Moreover, the Building Better Region's Fund guidelines state that cash contributions can come from any source, including state, territory and local governments," she said.

"Should Glen Innes Shire Council (GISC) be successful in their application for state funding, this may be considered as a cash contribution for the total cost of the project."

"Both councils and the New England Rail Trail committee are in regular correspondence and meet regularly with the regional and state government rail trail and tourism representatives on the best ways of moving the project forward.

"After COVID-19 took a huge hit on local tourism, it would be a welcome addition to the area and give the region a needed boost."

The trail is expected to inject $1.5 million into the local economy each year with an experience-based tourist attraction unique to the northwest region.

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GISC mayor Carol Sparks said she expects construction to span 24 months.

"We totally support it, the key findings of the business case were that construction would likely span 24 months and generate $5.7 million of new tourist expenditure in the region until 2024," she said.

The rail trail would span 103km between Black Mountain and Glen Innes.

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