Sir Keir Starmer and Chancellor Rachel Reeves are expected to announce details of the project before the Labour Party conference next month.
The proposed railway aims to connect major northern cities from Liverpool to Hull, including Leeds, Bradford, and Sheffield, addressing long-standing criticisms of poor regional infrastructure.
This move follows pressure from northern political and industry leaders who have advocated for the revival of the Manchester section of HS2 and the commencement of Northern Powerhouse Rail.
The previous Conservative government had scaled back or cancelled significant rail projects in the North, including the HS2 extension to Manchester, citing budget overruns and delays.