Nine new light rail stations will be built after a long-awaited $176 million plan to expand the fledgling transport service was approved today.

The Premier, Barry O'Farrell, said the construction firm, John Holland, had been awarded the contract to extend the network from Lillyfield to Dulwich Hill - with work to begin as early as next month.

Nine new light rail stations will be built in a $176 million expansion of the Sydney transport system.

The extension would be open for the first passengers by 2014, Mr O'Farrell said.

The contract includes buildingthe nine stations, in addition to the power and signalling systems and bridge works.

The new stations are:Leichhardt North, Hawthorne, Marion, Taverners Hill, Lewisham West, Waratah Mills, Arlington, Dulwich Grove, and Dulwich Hill. This stop will be adjacent to the Dulwich Hill train station.