Planners have long agreed that a dedicated freight rail link in the Hunter is necessary, and a fire on a Pacific National train near Cardiff on Monday that left the Newcastle rail line partially closed for hours has again highlighted the issue.

But while the state government says it recognises the need for the bypass, and Transport for NSW says it is “investigating options for a dedicated freight link between Fassifern and Hexham that bypasses Newcastle”, there won’t be a decision on a route in the short term.

Asked about the progress of the corridor on Monday, a spokeswoman for Transport for NSW said it was “in the process of assessing possible routes” and was “carefully considering land use constraints such as flooding, ecology and existing infrastructure”.

“Identifying corridor options will require extensive consultation with key stakeholders over the next one to two years,” she said.

The spokeswoman said the department was considering the possibility of integrating the corridor with “existing and future transport infrastructure”, including the proposed M1 motorway extension to Raymond Terrace.

“The option of combining the M1 Extension and Lower Hunter Freight Corridor is being investigated,” she said.

The spokeswoman said once it was completed, the freight bypass was “expected to provide sufficient capacity to accommodate future freight rail demand and improve regional and interstate links”, as well as easing the load on the existing rail network.

“The corridor is also expected to increase the efficiency and reliability of the rail network by separating the majority of freight and passenger rail movements between Fassifern and Newcastle,” she said.

Transport for NSW is working with Roads and Maritime Services on the proposed M1 motorway extension to Raymond Terrace project.

The bypass has been called for from numerous bodies responding to a litany of planning studies in recent years.

In the Draft Hunter Regional Plan, which the Newcastle Herald reported last week received 217 submissions before it closed for public comment late in March, the bypass was “being planned”.

“Improvements to transport corridors will be needed to maintain efficiencies in the network, particularly for freight, and to allow for future growth,” the draft report read.

“Improvements to extend the M1 Pacific Motorway to Raymond Terrace, complete the Newcastle Inner City Bypass, and provide a freight rail bypass around Newcastle’s residential suburbs are already being planned.”

In 2013 the Hunter Development Corporation listed the Lower Hunter Freight Corridor as a regional infrastructure priority, saying a corridor should be reserved.

In its Hunter Infrastructure Plan, the corporation said the freight trains moving through the Adamstown gates posed “significant safety risks, numerous commuter delays and disruptions” as well as “noise, vibration and dust disturbance to surrounding residents [and] visual blight.”