KiwiRail has backed down from a controversial plan to allow buses to park on land being eyed for a heritage-flavoured railway station in Parnell.

The state-owned company also on Friday assured former Auckland Regional Council chairman Mike Lee - whose organisation wound up on Sunday to make way for the Super City - that land would be made available for a station at Parnell.

But KiwiRail chief executive Jim Quinn, in a letter to Mr Lee, did not rule out other commercial uses for railway land around a station site favoured by the regional council and Parnell community groups.

He said the continued occupancy of the 2ha site below Cheshire St by the Mainline Steam Trust, which runs a maintenance workshop there for vintage charter trains, was "dependent on any other commercial developments in the area and its suitability".

Mr Lee, who has been elected to the new 20-member Auckland Council, said he doubted KiwiRail would evict the steam trust against strong community support for its retention in association with a heritage-based railway station. He said he was greatly encouraged by the company's commitment to making land available.

"They've stopped the buses and he [Mr Quinn] has said he is willing to build a station - I suppose the onus will be on Auckland Transport and Auckland Council to get that station built.

"They've at last agreed in principle they will do it and they will stop the area being used for buses so I think we can say it's a big step forward."

KiwiRail previously considering a proposal by NZ Bus owner Infratil to park up to 60 Link buses on the site, an idea opposed by the regional council and the business association Parnell Inc as likely to put too much pressure on local feeder streets while also undermining the community's vision for a heritage-based station.

The regional council passed a resolution at its final working meeting in late September calling for KiwiRail and the Super City council to make an early start on a $13 million-plus station centred on a transplant of Newmarket's former heritage station building.

KiwiRail received a $5 million Government grant to move the 112-year-old building, which is 50m long and was put in storage in 2007, and the region council called for it to be established along one of two new platforms at Parnell.

Parnell Inc, with support from local architects and other groups, also wants the Mainline Steam depot incorporated into a heritage precinct within easy reach both of the suburb's shops and Auckland Museum.

Although a regional council report estimated it would cost $13.2 million to $15.6 million to build the new station, Mr Lee said KiwiRail could make a hefty start with $4.2 million remaining from its Newmarket relocation budget.