An artist's impression of a tram in Leith

The problem emerged as councillors ordered a £400,000 study into the costs and benefits of extending the line to Leith and Granton.

The report is expected to conclude that thanks to investment in the trams from the developers of the St James Centre the line could be extended at least part of the way down Leith Walk within five years.

Designs for later sections of work – from Pilrig Street to Picardy Place – will now be revised to accommodate a tram extension.

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A new report, entitled Future Investment in Public Transport – Potential Tram Extension, revealed that some designs for the work had discounted the likelihood of trams travelling down Leith Walk because it seemed too far off.

It said: “The Leith Programme, in its current form, contemplated that the best estimate of a timescale for work, commencing on any tram extension on Leith Walk was seven to ten years, so the original design excluded a specific allowance for tram.”

Work to improve walkways and roads at the Foot of the Walk – due to begin in February – will continue as planned with “any modifications to integrate” a possible tram extension set to “follow later”.

It comes as transport leaders announced a £400,000 report had been commissioned to pursue an extension to the tramline through Leith as far as Newhaven. The outcome of the research will be used to refresh the business case for the proposed extension.

If taken forward, the study will see slit trenches and trial holes dug on Leith Walk to confirm the position of utilities. The city has confirmed most of the underground assessments would be “non-invasive” and have a “minimal impact” on the Leith Walk upgrades.

The “detailed assessment” of the case for extending the tram will report back in spring, when councillors will make the final decision on whether to go ahead with an extension that is expected to cost around £80m.

And sources have revealed that any extension could be built at least as far as McDonald Road by 2019 – when the new £1 billion St James Quarter is due to launch.

Any decision to extend the tram is expected to be controversial with one senior councillor predicting “blood on the floor” as party groups debate the issue at the city’s Full Council meeting on December 18.

“Even if it doesn’t play out in the council chamber, there will certainly be blood on the floor of the group rooms,” the source said.

Conservative transport spokeswoman councillor Joanna Mowat questioned whether the upheaval for residents was worth it. She said: “It’s disappointing these works aren’t compatible because councillors from opposition parties did ask that question. We were told that that was going to be factored in, and I’m not clear how much it has been in the initial designs. Given the experience the first time round, do we want to embark on this again?”

Transport leader Councillor Lesley Hinds said the growing demand for public transport in the Capital made the case. She said 90,000 tram journeys were taken every week and Lothian Buses had reported a three per cent rise in passengers.

Cllr Hinds said: “But we also have a real challenge in terms of Edinburgh’s population, which is forecast to grow faster than anywhere else in Scotland. We need to plan strategically and look at the next five, ten, 15, twenty 20 years and beyond. If you look at any successful city’s management of public transport, what they do is look at investment as a long-term plan, and that’s what we need to do in Edinburgh.”

And she added: “That’s often been the criticism of the tram project in the past, that elected members didn’t have all the information needed to make key decisions. I’m determined that they’re going to have the full information needed to decide on future investment.”

Change could also be on the way for other key city arteries, with plans also being floated for guided bus routes on sites earmarked as future “tram corridors”. The segregated lanes for “Bus Rapid Transit” services could eventually be used to run trams along routes where legal powers to build new lines haven’t yet been secured, such as through south-east Edinburgh as far as Little France.

Green transport spokesman Councillor Nigel Bagshaw said any future extension to the tramline needed to be a “contract” with Leith residents.

He said: “With all the history surrounding the tram project, there’s obviously a need for great caution.

“The cost of examining any future extension is substantial and councillors will want to be convinced that there are genuine and achievable benefits.

“So, if and when the project goes ahead, we’ll need to see a watertight business case; making sure utility and tram works take place at the same time; proper communication with local businesses and residents; and a contract which protects the council in a way the original one did not.”

Number crunchers predict future

Officials have crunched the numbers to determine future demand for public transport in the Capital, particularly in Leith. Edinburgh’s population is expected to grow from 482,600 to 619,000 by 2037. This growth is coupled with a move towards smaller households, meaning the number of homes in the city is set to rise by 39 per cent over the same period, putting added strain on transport.