The loop would connect Fleetwood, Poulton, Kirkham, Blackpool, Thornton and Cleveleys.
The Fylde coast’s three local authorities are being urged to support ambitious plans for a tram loop by joining forces to create a £2m development fund.
It is proposed Blackpool, Fylde and Wyre councils each include a bid for cash towards the scheme as part of their submissions to the government for a share of the Future High Street Fund.
It is estimated a comprehensive business case study would cost around £2m, which would be split equally between the councils.
This would be used to recommend how the scheme could be implemented if funding became available in the future.
The loop proposes to use the mothballed rail track between Fleetwood and Poulton for trams, while the Kirkham to Blackpool South line would be converted from trains to trams.
The line would then connect to the existing Blackpool to Fleetwood tramway.
It already has the support of Blackpool North and Cleveleys MP Paul Maynard, while Prime Minister Boris Johnson has pledged to re-open the
Poulton to Fleetwood line as part of a £500m national campaign to restore closed down track.
A report to the next meeting of the Blackpool, Fylde and Wyre Economic Prosperity Board on Tuesday January 7 says the aim is to create “a more cohesive Fylde Coast public transport system”.
Blackpool Council, in conjunction with Lancashire County Council as transport authority for Fylde and Wyre, would undertake the feasibility study.
The report adds: “It is important that this opportunity is pursued to prepare the way to develop the tramway network further to enhance the sub-region in terms of accessibility, regeneration and environmental sustainability and support important economic sectors such as tourism.
“A more efficient and effective, modern and reliable, public transport system could be created by operating continuous tram lines between Kirkham and Wesham and Poulton-le-Fylde via Lytham, St Annes, Blackpool, Cleveleys, Fleetwood and Thornton.
“A tramway loop would also serve Blackpool Airport Enterprise Zone, Blackpool Pleasure Beach and Hillhouse International Enterprise Zone.”
For the scheme to go ahead, it would also need the backing of rail operators and Network Rail.
The committee is being recommended to accept the proposals and approach the Ministry for Housing, Communities and Local Government and Lancashire County Council to ensure they are on board.
Bodies including Blackpool Transport, Network Rail, Community Rail Lancashire, Transport for the North, the DfT and the Poulton and
Wyre Railway Society would also be consulted.
The tramway is already being extended up Talbot Road to connect with Blackpool North train station.