NEWCASTLE’S light rail system will run down the heavy rail corridor from Wickham then shift to Hunter Street and Scott Street to arrive near the beach at Pacific Park, under a ‘‘hybrid’’ route the state government has selected.

The infrastructure subcommittee of cabinet endorsed the route on Wednesday night. It was was one of three options put on public exhibition earlier this year.

“Newcastle residents and businesses said they want access to the waterfront, more public domain and the option to extend the light rail in the future,’’ Planning Minister Pru Goward said.

“By removing the barrier of the heavy rail line, and opening up significant areas of the rail corridor for public use, the city centre can be re-united.’’

The chosen route bypasses the Hunter Street Mall, unlike the most expensive of the three options that would have run through it and was initially favoured by the city’s lord mayor Jeff McCloy.

The other and cheapest option was to run it down the rail corridor after the heavy rail is truncated at a new Wickham interchange.

The government hasn’t said what the project will cost, but puts it within the $460 million that was put on the table, including $340 million from the proceeds of the lease of the Port of Newcastle.

Minister for Transport and the Hunter Gladys Berejiklian said the route struck the ‘‘best balance’’ between ‘‘a quality transport outcome for Newcastle’’ and ‘‘allowing the city and its waterfront to be reconnected and revitalised’’.

“I am pleased for the Hunter community that this decision has now been made and we can get moving on the delivery of this important project,’’ Ms Berejiklian said.

A start date for work is yet to be given, but a timeline would be announced soon.

Work has previously been expected to start by December.

New Premier Mike Baird wants to see the project pick up pace, after the government announced late last month the port lease for $1.75 billion – more than double the initial $700 million estimate given publicly.

Newcastle MP Tim Owen said connecting the light rail at what is expected to be Worth Place from the rail corridor to Hunter Street would help encourage the city’s revitalisation.

‘‘We’ll truncate the heavy rail as quickly as we can and get that done by the end of the year and hopefully start work on the interchange,’’ Mr Owen said.

The government has previously promised any left over funds from the $460 million allocated to the project would be put into the Hunter Infrastructure Investment Fund.