Dr Brian Mawhinney, Secretary of State for Transport, left the ball firmly in the court of local authorities and private companies to raise as much money as possible before revealing the Government's contribution.
The two schemes are Croydon Tramlink, a 17-mile network in south London, and Midland Metro Line 1, a 12-mile light rail line running from Birmingham to Wolverhampton. Each scheme will cost about £150m.
Dr Mawhinney said yesterday: "I have set aside in my budget the very significant amounts of taxpayers' money which would be my contribution to the schemes.
"In both schemes we will be looking for significant contributions from the private sector. They are very much in keeping with the Government's private finance inititative."
Dr Mawhinney hinted that councils might have to be prepared to sell off assets in order to raise money to put into the light rail system.
Discussions between the Government and Centro, the organisation set up by 27 district councils in the West Midlands, about funding of the Metro Line will start in the near future.
Tramlink, which will connect Croydon with Wimbledon, Beckenham and New Addington, is one stage further ahead because a consortium has already indicated that substantial private sector money will be available. Bids for the project should be invited next year. The aim is that construction of both projects, which will take about three years to build, will begin in 1995-96.
The Government's announcement received a warm response from the Project Development Group, which is behind the Croydon scheme. This involves Croydon Borough Council, London Transport and three private companies, Tarmac, AEG and Transdev.
Ed Tumath, the group's project manager, said: "I think it is understandable that the Government has not committed itself to a firm amount of money because they want to maintain their negotiating position."
But Richard Worrall, chairman of the West Midlands Passenger Transport Authority, made up of the councils supporting Centro, said: "I am hardly optimistic. This looks to me like a `no' crudely disguised as a `yes'.
"What I feared was that the Government would give a `yes' to Midland Metro which was so hedged with further conditions that the project becomes unachievable. He said that no such conditions about financing had been imposed on the two existing light rail schemes in Manchester and Sheffield and that the Passenger Transport Authority had already committed nearly £13m from the enforced sale of a bus company.