The New South Wale and federal governments announced on Wednesday that the Northern Sydney Freight Line system would be upgraded for $1 billion. The system links North Strathfield and Newcastle.

Brendan Lyon, chief executive of Infrastructure Partnerships Australia (IPA), said the upgrade aims to have more freight train movements to 44 from current 29 freight trains daily. At the same time, it would remove 200,000 trucks a year from NSW roads and reduce carbon emissions by over 100,000 tonnes annually.

The federal government will spend $840 million, while NSW will provide $214 million. The upgrade is expected to be complete by 2015.

"Freight trains (are) spending up to 40 per cent of their journey time waiting for a pathway through the Sydney rail network... This agreement for a grade separation of the corridor will significantly improve freight access through northern Sydney, while also improving passenger reliability on the Main North Line," Mr Lyon said in a statement.

Federal Infrastructure Minister Anthony Albanese said construction will start in February, which would create about 1,000 jobs.

The project includes the construction of a third rail track between Epping and Pennant Hill to allow northbound freight trains to go in the uphill direction towards Hornsby. It would also permit passenger trains that exit the Epping-Chatswood Line to overtake the freight trains which are slower.

IPA would start laying the third track on March 2012 and expects to complete it by June 2016.

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