But the proposal, part of a package of measures to boost the prospects of "overlooked and left-behind" towns and villages, was described as a "total sham" by a rail union.
Prime Minister Boris Johnson announced a package of measures, including cutting business rates for shops, cinemas and pubs, designed to help places which have not always benefited from economic growth.
He said the £500m fund to restore lines removed by the 1960s Beeching Report, which resulted in more than 4,000 route miles being removed from the system in the 1960s, would re-connect towns and villages to the rail network.
Among the candidates to benefit from the fund is the 12-mile stretch of railway between Skipton in North Yorkshire and Colne in Lancashire, which has been closed since 1970s and has recently seen a local campaign to re-open it.
An initial study, which was completed in December 2018, found that it was technically feasible to re-open the line and the Department for Transport said it was working to assess the freight demand and the commercial viability of the scheme”.
Then Transport Secretary Chris Grayling committed to re-opening the line but disagreements over whether the line could be used for freight and a counter-campaign group in Earby have stilted plans.
Last month a peer claimed that consultants appointed by the Government to report on the proposal found that the route is “entirely unsuitable for freight of any kind”.
TSSA General Secretary, Manuel Cortes described the announcement of a new rail fund as a "total sham".
He said: “What we are hearing today from the party which has given us two decades of privatised chaos on our railways is beyond parody.
“The travelling public in their millions won’t believe a word the Tories say on the railways. This announcement is a total sham and Boris Johnson and his chums can’t be trusted.
“In recent years we have seen the collapse of the East Coast franchise, with others tottering on the brink, widespread timetabling chaos, rising ticket prices and overcrowded services – while they continue to drag their heels on HS2."
Andy McDonald, Labour’s Shadow Transport Secretary, said: “This isn’t new, the Conservatives announced it two years ago to try to distract from the collapse of the East Coast franchise which ultimately cost taxpayers £2 billion. Unsurprisingly not one of the Beeching cuts has been restored.
“The Tories have broken their promises on rail time and again – in 2015 they promised electrification projects that were put on hold just months after the general election, and then ditched."