East-West rail link: Bedford, St Neots and Cambourne in plan
The preferred route has been announced as part of the third and final stage of the East-West rail link.
East West Rail Company (EWRC) hopes the route between Bedford and Cambridge will go via St Neots and Cambourne.
If it is backed by the government two stations, one for Tempsford or St Neots and one for Cambourne, would be built as part of the plan.
Simon Blanchflower, of EWRC, said it was the "most popular option" with people who responded to a consultation.
The line will be the final stage of the Oxford-Cambridge Arc, "supporting economic growth" and "improve passenger access" the government said.
Trains already operate on the section between Oxford and Bicester after it was completed in 2016, following a major upgrade of an existing rail line.
Construction in the second part of the project, between Bicester and Bedford, has begun and should be completed by 2023.
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It is hoped the third and final phase, from Bedford to Oxford, would be finished before 2030.
Mr Blanchflower, chief executive of EWRC, said: "Of the five route options we consulted on, people were really positive about the one we have chosen.
"The line would bring people closer to opportunities for jobs and homes and bring friends and family closer together."
Mayor of Bedford Dave Hodgson, said the announcement "places Bedford at the heart of this key new infrastructure."
Councillor Ryan Fuller, executive leader of Huntingdonshire District Council, said: "This decision has been long in the making and we are delighted that East West Rail has chosen Route E which brings the potential for greater prosperity to all parts of Huntingdonshire, a choice that is best suited to our residents and businesses."
The final decision on "whether to take this project forward" lies with the government, the rail company said.
Transport minister George Freeman said the new line had the potential to "support opportunities for new housing, reduce congestion and pollution and unlock the economic potential across the region".