Image: City of Edinburgh Council
Edinburgh's tram line is to be extended from the city centre to Newhaven at a cost of up to £207m.
Supporters of the plan to lengthen the tram line by 2.8 miles (4.6km) say it is needed to match the city's population growth.
But funding concerns have been raised after it was revealed the project's costs had jumped by 25%.
Works should be completed by 2022 and the extended line should be operational in the first quarter of 2023.
The project was approved after a vote at the full meeting of Edinburgh City Council.
It will be funded through borrowing paid back by future tram fare revenues, along with a special £20m dividend from the city's public bus firm Lothian Buses.
The original tram project came in at twice its original budget and the mistakes made on that scheme are subject to an ongoing public inquiry.
Edinburgh City Council's transport convenor Lesley Macinnes said: "This is a crucial decision for Edinburgh - for today's residents and for generations to come.
"Taking trams to Newhaven will allow brownfield development sites to be transformed, opening up the whole of north Edinburgh to a wealth of opportunities in terms of jobs, housing and local facilities.
"I firmly believe the tram project is in the best interests of the city's current and future residents and, as an administration, we will do everything in our power to make sure it's delivered on time and on budget."
It was initially estimated the tram extension would cost £165m but the final business case for the project now states it will be £207m, including a contingency fund.
In the first year of operation, the council predicts 16 million passengers will use the line.
Paul Tetlaw, of transport lobby group Transform Scotland, said: "This will serve a key transport corridor and boost development in the city creating more sustainable travel patterns.
"In the UK Nottingham, Birmingham, Manchester and Blackpool are all extending their systems and across the water Dublin is doing likewise.
"Edinburgh's initial tram route has been a great success, it has consistently outperformed passenger projections and there is ample evidence that it has encouraged motorists to leave their cars behind and take the tram into the city."
Critics remain sceptical about the cost and disruption that will be caused by the tram extension through Leith.
Harald Tobermann, of the Community Councils Together on Trams group, is calling for controlled parking zones along the tram route, claiming this is "key to preventing the tram corridor from turning into Edinburgh's largest park and ride area".
He added: "We recognise that a strong feeling exists among many people in our communities that this project is being pushed through with undue and unnecessary haste."
The council's transport and environment committee had already backed the extension despite concerns about cost and disruption.
Taking into account lessons learnt in the first phase of the tram project, construction is planned using a "one-dig" approach - closing each work site only once and opening them again only once all works are complete.