Plans for a £180m Metro Central transport hub around Cardiff Central station have been unveiled.
The existing station would be revamped and expanded to cope with the millions of new rail passengers projected over the next 25 years.
The project would also involve new Metro and coach stations, in addition to the new bus station already planned.
It would need Welsh and UK government funding, as well as the private sector to add to £40m from the city deal.
The Metro Central plans, at an early stage in their development, involve:
- The modernisation of Cardiff Central train station
- A new Metro station for a tram next to the main southern concourse of the railway station
- A new coach station - south of the railway line
- A cycle hub with room for 1,000 bikes and new cycle routes from both sides of the station
- A new park-and-ride multi-storey car park in the existing station car park
Updated plans to transform Cardiff Central station - by far Wales' busiest - were first unveiled in the summer of 2015.
But the proposals were rejected because of cost by the Department of Transport and now a "more practical and affordable solution" has been put forward.
Last year, a new platform opened to help ease commuter congestion but there are now plans to increase the number of ticket barriers at both station entrances and provide direct access to the two main platforms and an extended platform 0.
Passenger numbers at Cardiff Central continue to rise and account for a quarter of all travellers using stations across Wales - twice as many as Swansea, Newport and Cardiff Queen Street combined.
The new interchange needs to have the capacity to exploit the projected growth in passenger numbers to 22m by 2023.
The city region estimates that 30,000 jobs could be created in the city centre over the next 10 to 15 years, with around 40% of jobs already taken up by commuters, the majority currently using their cars.
Cardiff Capital Region's cabinet met to agree in principle to allocate £40m of its city deal fund towards Metro Central.
But it could still take 18 months before the full business case is complete.
Councillor Andrew Morgan, chair of the Cardiff Capital Region cabinet, said: "Anyone who travels into and through Cardiff is very aware of the desperate need for improvements to the transport infrastructure, and the anticipated rapid growth of the capital city means this project is absolutely critical.
"I think it is important to stress that this is a project which will benefit all of the region, particularly if we are to see the introduction of a new 15-minute service between the Valleys main lines and Cardiff under the South Wales Metro plans."
Cardiff Council leader Huw Thomas said: "There is a compelling and urgent need to make sure that Cardiff Central can accommodate predicted growth in passenger numbers, especially given the role that the Metro will play in spreading the benefits of the city deal."
The latest announcement comes with work on the first phase - the new bus station - about to get under way.
It follows years of wrangling about the replacement bus station, as part of the wider development of Central Square, in front of the station.
Just before Christmas, Cardiff Council reached a funding deal involving the Welsh Government and Rightacres.
The agreement will see the newly established organisation - Transport for Wales - oversee the new Metro system and operate the bus station.
Congestion is being recognised as an increasing problem in Cardiff. If the authorities are to ease that then something significant needs to be done to get people out of their cars and in particular, to encourage people to use public transport to commute to work.
Dr Andrew Potter, lecturer in transport and logistics at Cardiff University, said congestion was an issue for the city, while the Metro also had to deliver for the wider Valleys area.
"It's all well and good having lots of people coming into Cardiff but you don't necessarily want all the jobs in Cardiff and there not being employment opportunities up the valleys as well.
"It's important the Metro develops across the whole valleys region."
He said it was also important that buses and other forms of transport were looked at as well as rail.
The region says initial discussions with the UK and Welsh Governments and the private sector show support for the hub.
The investment from the city deal is significant and greater than the £37.9m the Cardiff Capital region allocated to building a foundry for compound semi-conductors in Newport.