Transport minister Tom Harris told a meeting of the all-parliamentary light rail group that Network Rail, Northern Rail and the Department for Transport (DfT) will begin trials of the system in just over a year.
"These will provide empirical evidence to support or undermine the case. We will wait until we get the figures before we make policy, but I am optimistic about the opportunities," Harris said.
Promoters are welcome to submit business cases for tram-train projects, he said. However, he warned against using public money on proposals involving technology untested in this country.
Network Rail future railway development manager Ian Ambrose said that the trials' length will depend on the time needed to acquire vehicles and achieve meaningful results. A similar system is run by Parry People Movers in Stourbridge.
Tram-trains are lightweight vehicles that operate on existing railway tracks and tram lines in urban areas. They are widely used in Europe and Harris visited Karlsruhe in Germany to learn about its system.
A DfT spokesman said: "We are keen to discover whether they can help tackle congestion across the UK."
The government pledged up to 25 light rail lines in major cities as part of its ten-year plan in 2000. But spiralling costs resulted in schemes being scrapped in cities including Leeds, Manchester and Portsmouth.