The compact 'people mover was installed in less than 24 hours along Barking's main pedestrianised shopping street.
It runs along temporary track set in a brick bed and is powered by friction-driven flywheels supplemented by low-voltage recharges when stationary, so does not require overhead power cables or electrified rails.
For the next three days the tram will ply a 100-metre route and passengers will be questioned by Barking and Dagenham council staff on whether they would use an extended service.
The authority is considering spending pounds 1m on a tram system to link the railway station, shopping centre and a new retail development near Barking Quay on the edge of the town. The waterside complex suffers from being relatively inaccessible and the 'people mover is seen as an environmentally friendly and attractive way of providing a connection.
The tramline would also contribute to a larger scheme to revitalise the run-down quayside for boating, shopping and other recreational uses. The authority should learn within three months whether the Department of the Environment will let it construct a pounds 1.5m tide barrier to create a lagoon at the riverside.
Cafes and bars would then be encouraged to move to the waterfront, and the protected pool could be used by dinghies and canoeists. If the scheme goes ahead, the quayside should be transformed within five years.
Barking's temporary light railway, paid for largely by local traders, has been timed to coincide with a conference tomorrow organised by the council on how the East Thames corridor can be regenerated. Participating local authorities will argue that public transport links should be improved in conjunction with projects to bring jobs and businesses to the area, not as an afterthought.
Jack Knowles, controller of development and technical services with Barking council, said: 'We need regeneration, no one would say otherwise, but what we don't want is another Docklands where development happened without any idea of how people were going to be moved about.
Mr Knowles believes a key issue is persuading the Government to fund a thorough review of how public transport across north-east London can be improved.
He will make his case directly to Stephen Norris, Minister for Transport in London, who will be addressing the conference.
In the longer term the 12 boroughs along the East Thames corridor will seek grants for improving public transport.
Croydon council officers will travel to Parliament today to be questioned by MPs over their plans for a pounds 160m tram network across south London.
The Croydon Tramlink Bill is due to resume its committee stage in the Commons today and should receive the Royal Assent in November.
Work should start early next year on the 18-mile network linking Croydon with Wimbledon, Beckenham and New Addington. The last tram service was withdrawn from New Cross in July 1952.