The ABC understands the money will be made available in next month's budget, although the Cabinet's expenditure review committee is yet to decide on a final figure.
Farmers and the freight industry have lobbied governments for decades to build the inland rail — a $10 billion direct line that would move goods from Brisbane to Melbourne in less than 24 hours, and link south-east Queensland with Perth and Adelaide.
Infrastructure Minister Darren Chester would not confirm the amount being allocated but said the Government was committed to completing the project.
"I will not speculate on what is in the budget, but what I will say is that the inland rail project is a critically important piece of infrastructure that the Turnbull-Joyce Government is committed to building," he told the ABC.
"The Prime Minister's already indicated that he wants construction to start in 2017 and that will occur."
Australian Logistics Council managing director Michael Kilgariff said the freight industry was tired of waiting for action.
"It is time that we really need to move from the planning stage into the funding and construction stage," he said.
"We are very hopeful that the current budget will actually give a very, very strong support to it," he said.
Rail is vital infrastructure for grain growers but the farm sector has complained that the east coast network is unreliable and in desperate need of upgrades.
Victorian grain grower Ross Johns described the existing infrastructure as "way too slow, obsolete and an unusable asset".
He said farmers often couldn't use the lines when they need them most.
"We have not been able to operate with temperatures over 33 degrees and the majority of the grain needs to be moved when it is summer time and in the heat." he said.
More grain has to be transported on trucks as a result, and Johns said that costs farmers more and raises safety concerns.
"I personally think we are going to need a shift to B-triple truck movements, which are going to be able to move the grain efficiently," he said.
Chester said one of the main reasons the Government wants to build inland rail is to get more trucks off roads.
"We have recognised [inland rail] will change lives, it will save lives," he said.
"It does change lives … by getting our products to market in the most cost-efficient way possible, and it will save lives by reducing road trauma."
The Coalition allocated $593 million to buy land for the inland rail project in last year's budget and Labor allocated $900 million to the project when it was in government.
The ABC say infrastructure spokesman Anthony Albanese said he welcomed any major investment but criticised the Government's progress.
"The fact is that the current Government had promised that new construction would begin in 2016," he said.
"We are now a year beyond that and there has been no activity whatsoever from the Federal Government."
Grain grower Ross Johns said he would be crossing his fingers for a big commitment to rail on budget night.
"If the Australian government is not prepared to invest in Australian infrastructure, who is?"