The National Audit Office (NAO) inquiry into the DfT's role in the light rail schemes said the information given to ministers was fair but the evaluation took a long time.
The Leeds Supertram required five years and one month to progress from its submission in 2000 to its rejection. South Hampshire's proposal took four years and five months to decide.
The DfT withdrew its pledge of funding for all three schemes in July 2004 after the costs spiralled. Despite revisions to proposals, it only approved Manchester's amended Metrolink extension last year.
The department decided that a rapid transit bus scheme would be more cost effective in Leeds and said increased costs of 59 per cent for south Hampshire were not acceptable.
The NAO criticised the government for not communicating well enough with the schemes' promoters on whether the proposals would succeed. The DfT's new approval process means that it only commits full funding once a firm bid has undergone procurement.
Further guidance on the responsibilities for local authorities and the department on costs was published in September.