Five new railway stations could be built in south-east Wales to improve transport links with western England.

The UK and Welsh governments announced they are working together on a £2.7 million study to develop options for new stations and services on the South Wales Main Line.

This follows Lord Peter Hendy’s review of UK transport connectivity in 2021 which highlighted the need to reduce congestion on the M4 motorway to ease cross-border journeys.

A series of options will be considered as part of the study, including the creation of five new stations between Cardiff and the Severn Tunnel.

Richard Holden, a transport minister for the UK Government, said: “Delivering better transport links is a vital part of how we transform opportunities for people from across the United Kingdom.

“That’s why I am so delighted that, working with the Welsh Government, we are getting the ball rolling on in-depth work to boost connectivity and drive growth.”

Welsh Secretary David TC Davies said: “Good transport connections between South Wales and western England are essential for the economy in Wales, enabling businesses to grow and flourish, and making life easier for people to travel for work and leisure.

“This funding from the UK Government is vital in exploring how best to relieve congestion across South Wales.

“I’m pleased to work with the Welsh Government on plans that could have a huge impact on the many thousands of people who use the transport network in South Wales every day.”

The Welsh Government’s deputy minister for climate change with responsibility for transport, Lee Waters, said: “This is a key step to tackle congestion around Newport and was one of the main recommendations of the Burns Commission, which was endorsed by Lord Peter Hendy’s Union Connectivity Review.

“The business case is compelling and we are keen to make progress so that we can get more people onto South Wales Main Line trains, complementing the Welsh Government’s investments in improving access to rail.”

The South East Wales Transport Commission, chaired by Lord Burns, published a report in November 2020 to investigate sustainable ways to tackle congestion on the M4.

Lord Hendy’s review also proposed improving transport links between North Wales and north-west England, better connectivity between Wales and HS2 services, and a package of measures to cut train journey times between Cardiff and Birmingham.