Mayor Mufi Hannemann called the federal approval a "major milestone" because it allows the city to receive future federal construction money for the ambitious transit project as well as for other important traffic improvements.

Hannemann praised Hawai'i's congressional delegation for pushing for the key approval.

The next critical step for the project comes Aug. 10, when the bill to increase the general excise tax to pay for a transit system goes up for final approval before the Honolulu City Council.

Next week, two council committees will discuss the proposal to increase the general excise tax from 4 percent to 4.5 percent beginning Jan. 1, 2007.

Hannemann remains hopeful that the project will win over those who oppose it. But City Council members Charles Djou and Barbara Marshall remain firm in opposing the project, which still leaves a majority in support.

"This the largest tax increase in the history of the state," Djou said. "People cannot afford it."

Council Chairman Donovan Dela Cruz — who counts himself in the seven-member majority supporting the project — called the votes in Washington "tremendously significant."

Transit proposals for O'ahu have been debated for at least 30 years, but each plan has been derailed by concerns about cost, failure to reach agreement over the technology and a lack of political consensus at crucial times.

Having such wide support this time, with Congress, federal transit officials, Gov. Linda Lingle, the state Legislature and the mayor and the Council in agreement gives real hope to the project, said Dela Cruz.

"Everyone wants to solve our transportation problems," Dela Cruz said.

But opponents see the federal support as a call to fight harder against the project. Dave Rolf of the Hawai'i Highway Users Alliance said the group wants to postpone the Aug. 10 transit vote.

The alliance was created to ensure that highway funds are used for improving roads. The association includes representative of various groups concerned about transportation, including taxi businesses, travel industry firms and the Hawai'i Automobile Dealers Association, of which Rolf serves as executive director.

Rolf said the city should be further exploring the cheaper option of high-occupancy toll lanes, or HOTLanes, "rather than rushing to pass a narrowly focused rail system."

He said two elevated lanes built on top of the highway would allow officials to charge a user fee for people to travel quicker on the alternative road. And Rolf thinks the lanes could be built without any new tax.

He said he is urging the council to delay the Aug. 10 vote.

But Hannemann and other supporters said the issue has been debated for decades and Honolulu needs to move forward with various solutions.

The federal legislation, approved by the House on a 412-8 vote and the Senate, 91-4, now goes to President Bush, who is expected to sign it.

Rep. Neil Abercrombie, D-Hawai'i, said the authorization for the Honolulu rail transit system was crucial.

"Traffic on O'ahu is adversely affecting our economy and quality of life," he said. "We need relief, and this means rail transit."

Sen. Daniel Akaka, D-Hawai'i, said the additional money in the bill will help strengthen the state's road and bridge network. "This legislation is an important step toward meeting the enormous traffic demands of our state," Akaka said.

Sen. Dan Inouye, D-Hawai'i, said the bill contains $50 million for one of his top priorities, work on the nonmilitary portion of Saddle Road on Big Island.

"Motorists will no longer have to use traffic-congested Hawai'i Belt Road," he said. "Saddle Road will, in effect, become a bypass that cuts 16 miles from a trip between Hilo and Kailua, Kona."

Hawai'i was among the five states receiving the smallest increases in annual highway program money — 19 percent, compared with a national average of a little more than 30 percent.

The bill also includes $15 million annually, equally divided between Hawai'i and Alaska, for ferries and related facilities.

Hannemann said the ferry proposal, road improvements and other key projects represent a multi-faceted approach to dealing with traffic congestion.

The bill also has $40.8 million for Kapolei traffic improvements, which will include the Kapolei Interchange and the North-South Road to reduce traffic congestion in West O'ahu.

Correction: Authorization for a Honolulu rapid transit project is included in a transportation funding bill passed by Congress last week. The bill will allow a project to move forward but did not provide a dollar amount for a project and did not support any specific form of transit. A previous version of this story incorrectly indicated that a specific type of transit won federal approval.