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Inland Railway proponents Australian Transport and Energy Corridor announced plans for the $A700 million, 400km proposed railway line that will link with the Surat Basin Railway, eventually allowing trains to travel between Melbourne and Gladstone.

ATEC said the railway - to be known as the Border Railway - will pass through Westbrook, Pittsworth, Millmerran, Inglewood, Yelarbon, Yetman and North Star and allow new coal mines to open at Felton East, Felton West, Lochbar and Bringalily in Queensland and Ashford in New South Wales.

Northern Energy director Keith Barker said the link - proposed to be completed by 2012 - will relieve constraints on projects being developed due to the shortage of coal chain capacity.

"The Border Railway will potentially bring a high-standard, modern transport connection closer to our Ashford hard coking coal joint venture and enhance the prospects for this project's development," Barker said.

"We are continuing to examine options for an earlier development of the Ashford Project and this proposed Border Railway link by 2013 should provide a much more robust transport solution for development of the high-quality hard coking coal at Ashford."

The entire rail system being finalised by ATEC will also allow coal companies more export options, effectively enabling mines to have multi-port access.

"As part of a much larger rail network, ultimately linking Gladstone with Melbourne, this link would provide the Ashford project with options to rail through Newcastle or Gladstone and possibly Brisbane," Barker added.

ATEC said no disruptions to rail traffic will be made during the construction of the railway line. It is seeking $120 million in federal government funding towards the project to cover costs of building two bridges and paying for the additional steel to make the railway dual gauge in Queensland.

Queensland Premier Anna Bligh has voiced her support for the project.

"The Border Railway has the potential to open up new transport and mining opportunities," Bligh said.

"I look forward to seeing the business case behind building a high-speed standard-gauge rail link between Melbourne and Gladstone. At first glance the project looks very exciting and now the hard work of assessment and evaluation will determine its viability.

"A nation building project such as that proposed deserves careful consideration.

"We will work closely with the New South Wales Government in coordinating and evaluating the proposal's assessment."