The government has given its strongest indication yet that it is will drop its sceptical position on rail electrification and back a new programme of investment.

Speaking at a conference this month, Action on Climate Change: A Role for Transport, transport secretary Ruth Kelly said last year's rail white paper "rightly prioritised" a massive increase in rail capacity, but added: "Looking beyond that I can see great potential for a rolling programme of electrification."

Kelly outlined the main advantages of electric over diesel trains as being cheaper, requiring less maintenance, emitting less emissions and offering extra capacity.

"I believe the business and environmental case for electrification is growing fast," she said. "As a result we are going to step up our efforts through a cross-industry working group to re-examine the business case for electrification, explore how costs can be brought down much further and agree priority schemes."

Kelly said she wanted this to work to be completed by the end of the year "so we can make real progress in laying down our longer-term plans for the railways".

Speaking at a Future of Rail conference this week, rail minster Tom Harris was more sceptical. "Electrification is not a cheap option and the amount of money we have to spend in the next control period is fixed," he said.