Onehunga community leaders are being assured that passenger trains will run between their main street and central Auckland from early next year, despite doubt allegedly raised by regional transport officials.

Auckland Regional Council chairman Mike Lee said yesterday that KiwiRail chiefs had agreed at a meeting in Wellington on Friday that a spur line would be provided to a site the ARC bought last year beside Onehunga Mall for about $8 million for a railway station and transport interchange.

He said that would allow potential freight trains from the Onehunga waterfront, and ultimately passenger services from the airport, greater freedom of movement than having the station on the main line.

The Onehunga Business Association and Campaign for Better Transport said they were dismayed when officials told them at separate meetings last week that a re-laid branch line would stop about 300m east of Onehunga Mall, and that Auckland-bound passengers would have to change trains at Britomart.

Business Association president Peter Gibson said an Auckland Regional Transport Authority official said Galway St - which runs parallel with Onehunga Mall - would have to be closed to road traffic to allow a temporary station to be built across it and along Princess St.

That advice was repeated to Campaign for Better Transport convenor Cameron Pitches, who said another authority official claimed KiwiRail subsidiary Ontrack had run out of money to lay the line to the regional council's Onehunga Mall site.

Mr Pitches said a $10 million Government funding allocation announced two years ago should have been ample to restore the branch line its full 4.3km distance from Penrose to the Onehunga waterfront, and to suggest otherwise was "just ridiculous".

Ontrack has already laid new tracks as far as Galway St.

Mr Pitches said 8000 people who signed a petition seeking a direct rail link from Onehunga to Britomart would be most disappointed by a suggestion from the transport officials that capacity limitations would force them to change trains at Newmarket.

Mr Lee dismissed that prospect, saying his council had battled for years for a reinstatement of a service between the main streets of both Auckland and Onehunga, "and that's what we are going to stick to".

"The whole idea is for a Queen St [the original name of Onehunga Mall] to Queen St, a Manukau to Waitemata, service," he said. "We don't see any need for terminating Onehunga services at Newmarket."

Mr Lee said KiwiRail chief executive Jim Quinn and and Ontrack chief operating officer William Peet assured him on Friday that the railway would be laid as far as the Onehunga waterfront, with a short spur branching off it to the new station site.

The priority would be to provide basic platforms at that site, while design work continued on how to gain the best value from it in terms of a bus interchange, enhanced passenger facilities and commercial development.

There would be no temporary station blocking road traffic across Galway St, Mr Lee said.

Transport authority communications manager Sharon Hunter said later it was the authority's intention that the regional council site would be used for the Onehunga line "from the start of the service" early next year.

It was also intended "that services will run from Onehunga to Britomart".

Mr Quinn said KiwiRail was keen to make the Onehunga Mall station site work, but still needed to check that it was technically feasible to lay a spur line at "a reasonable cost".

But he said the question of whether the main line would extend as far as the waterfront for freight depended on whether Ports of Auckland would pay for a terminal inside its gates.