Ironbridge Railway Trust will this month submit a bid to the Government for funding to reopen the railway line from the former power station at Buildwas to Ironbridge town centre.
Parry People Movers, a Black-Country based company specialising in small trams and railcars, has been lined up as a possible partner for the project.
Councillor Eric Carter, who is a spokesman for the trust, said the plan was to create a park-and-ride station at the old power station, which is being redeveloped by Rotherham-based developer Harworth, with trams or trains running to the World Heritage site about two miles away.
Councillor Carter said one million people visited the Ironbridge World Heritage Site every year, but there was little scope to increase parking in the town itself.
But he said the redevelopment of the 350-acre site for housing, leisure and commercial use presented a once-in-a-lifetime opportunity to improve transport links.
Until two years ago, the line had been used to transport coal into the power station.
Councillor Carter said a heritage railway, a conventional rail system or an environmentally friendly tram system using fly-wheel technology were all options being considered for the line.
He said; "The trust proposes that the service would be operated both with heritage trains and modern environmentally friendly units with the energy storage technology used by the Parry People Mover which runs on the nearby national rail Stourbridge town branch."
The bid will be submitted before a November 20 deadline.
Councillor Carter who sits on Telford & Wrekin Council, said he hoped to meet next week officials from neighbouring Shropshire Council – which covers the power station site – to finalise the details of the bid.
While the initial bid is just to link the power station to Ironbridge, it was hoped to be part of a longer term plan to reconnect the power station site to the national rail network.
Peter Lyons, chairman of Ironbridge Railway Trust said: "As a gateway to the Gorge, we believe the rail link can be an innovative and imaginative part of the regeneration of the Ironbridge power station site, building on and going further than the current proposals for the site."
Parry People Movers, based in Cradley Heath, specialises in flywheel energy storage, producing electric trams can which operate without overhead wires and railcars powered by low-emission gas, diesel or hydrogen engines.
Managing director John Parry said: "This will be a sensational opportunity to develop the World Heritage Site sympathetically, and for a joint Ironbridge Railway Trust and Parry People Mover solution to be recognised internationally as a model for environmental, economic and community improvement."