The region's transport body, Midlands Connect, is seeking £15 million in government funding for work that would see faster trains on the Birmingham to Shrewsbury line through Wolverhampton.
But the scheme – considered a precursor to the full electrification of the route – is now under threat after ministers launched a review in the face of mass spending cuts.
Transport minister Baroness Vere was pressed on the future of key rail schemes in the region during a debate in the House of Lords.
Asked by Lord Rosser for a timescale on improvements to the Wolverhampton to Shrewsbury route, including electrification, she said the Rail Network Enhancements Pipeline (RNEP) – launched in 2018 to enable schemes to bid for government funding – was now under review.
“There are a number of planned investments across the country, and it is right that the Government take time to review them to ensure that they meet the needs of the post-pandemic travelling public,” she said.
Baroness Vere added that a timeline for publication will be set out after Thursday's Autumn Statement.
Maria Machancoses, CEO of Midlands Connect, said: “Our business case for improvements along the line is overwhelmingly supported by businesses, residents and MPs along the line.
“But more than that, as well as supporting the levelling up agenda, it also represents great value - for every £1 spent on delivering faster trains along the line from Birmingham to Shrewsbury via the Black Country will deliver £16 in benefits.”
In August Midlands Connect submitted a bid for £15m for work on the Birmingham to Shrewsbury line, which would boost train speeds to 90mph.
The full electrification of the line – which has been backed by MPs including Jane Stevenson, MP for Wolverhampton North East, and Daniel Kawczynski, MP for Shrewsbury and Atcham – is expected to cost £200m.
The scheme has been on the table for years and is considered a crucial cog in the region's wider plans to improve transport links.
A full business case was submitted to ministers in July, with Midlands Connect saying the scheme would boost employment and training opportunities.
Under the first stage of the work, sections of existing track would be torn up and relaid in straighter lines, enabling trains to travel at faster speeds.
It is hoped the changes would see the journey time from Shrewsbury to Birmingham reduced from 56 minutes to 45 minutes, with line speeds boosted to 90mph.
Project delivery had been slated to begin in 2025.
The ultimate ambition is to electrify the route,and to introduce a direct, hourly service from Shropshire to London. Services to Birmingham International would also be doubled.
Meanwhile, Baroness Vere also revealed that a final decision on the Midlands Rail Hub – a £2 billion project to transform east-west connections – is expected next year.
Her comments drew criticism from former West Bromwich East MP Lord Snape, who said the scheme had already been “assessed to death”.