Three organisations have been selected to submit tenders for the multi-million pound rail link project between Edinburgh and the Borders.
The BAM, IMCD and New Borders Railway bids include a wide range of financial and construction companies.
Finance Secretary John Swinney said he was encouraged by the "strong UK and European interest" in the project.
The current target for completing the line between Edinburgh and Tweedbank in the Borders is 2014.
Formal expressions of interest were received from five organisations which has now been narrowed down to three.
Mr Swinney said: "This milestone takes us another step closer to providing timetabled passenger train services to communities along the route for the first time in over 40 years.
"Helping to create further opportunities for Scotland to flourish, through increasing sustainable growth in south east Scotland and provide a safer, quicker and greener mode of transport are key aims of this government."
The costs of the project have been estimated between £235m and £295m.
It is hoped a contract to construct the rail route can be awarded late next year.