IT IS ONE of the few good stories the NSW government has to tell on public transport - yet it has refused traditional bragging rights, perhaps because of a struggle taking place inside the state's transport and planning bureaucracy.

The extension of the light rail from Lilyfield to Dulwich Hill is continuing at a cracking pace. The laying of track is almost half finished. The rest of track should be complete - with new rails and concrete sleepers - by mid- November. Industry sources have told the Herald that test vehicles, although not trams carrying passengers, could be on the rails by early next year.

The cost of the project could come in well below the government's estimate. Transport NSW, in its Product Definition Report, estimated the cost of the project - including the light rail extension and a parallel pedestrian and cycle path - at $150 million.

Rail industry sources believe the cost of the entire project could be as little as $85 million. In May last year, the light rail operators, Metro Transport Sydney, estimated the cost of extending the line by 5.6 kilometres would cost about $70 million.

The Herald understands that the Minister for Transport, John Robertson, is fighting bureaucratic resistance inside the Department of Planning over a new environmental assessment, even though the project uses an existing corridor and converts heavy rail to light rail.