Cambrian Heritage Railways has awarded consultants Stantec UK Ltd and Allan Rail the contract to develop the srategic outline business case for the route from Oswestry and the Robert Jones & Agnes Hunt Orthopaedic Hospital to Gobowen.
The idea is that very light rail units, as seen on the Stourbridge branch line, would transport passengers.
Last year the Department for Transport awarded funding for the study to the railway, one of 13 successful applicants to Round 3 of the Restoring Your Railway- Ideas Fund. The fund is aimed at reopening lines and stations in order to reconnect and level up communities by giving access to jobs, homes and education.
Cambrian Heritage Railways spokesperson Roger Date said: "The consultants will prepare a business case, identifying the need for transport investment in the Oswestry and Gobowen area, set objectives for that investment and generate, develop and appraise a range of options which could deliver those objectives.
"This will include consideration of a comparatively low cost and innovative ‘Very Light Rail’ solution. A firm evidence-based case for investment will be presented to the Department for Transport in the autumn of 2022."
"We look forward to working with Stantec Ltd & Allan Rail over the next few months. They clearly have a great deal of experience in this type of work and appreciated the uniqueness of this potential project in that the line of route is not part of the national rail network."
Stantec project manager Stephen Canning said: "We, together with our long-term partner AllanRail, are delighted to have been appointed to deliver this important study. It is an opportunity to blend both a community-based case for investment and potentially innovative transport solutions which will maximise the social and economic benefits to Oswestry and Gobowen."
Councillor Vince Hunt, chair of Shropshire Council and chair of the Stakeholder Steering Group for this project said: "This if successful would change Oswestry for the better and make it more prosperous.
"It goes without saying that I share the delight that has already been expressed that the project has taken another step forward. There are a number of people that have put so much work and effort into progressing this and I thank them for their dedication and vision."
Earlier this year the railway reopened the line in the other direction as far as Weston Wharf, to link the town centre with visitor attractions including the Stonehouse brewery in Weston Pools.