The Government supported the western rail corridor "but where it starts and finishes depends on the studies being undertaken", according to Taoiseach Bertie Ahern.
He told the Dáil a report by an expert group would be ready by mid-April, and it had looked at the full linking of 12 to 15 towns from Sligo to Ennis.
He said this was the last year of major funding for projects such as the Dublin Port Tunnel. Funding could then be released, and nine of the 12 infrastructure projects decided for this year were in the border midlands west (BMW) region.
Mr Ahern also said "some imaginative way" must be found to use the national pension fund in completing infrastructure projects.
Monies from the fund, established to meet future pension liabilities, would not be needed within 25 to 30 years.
"We should be able to put aside more of this money. My view, given the demographics, is that we will not need it for far longer."
He was answering questions on infrastructure and public private partnerships (PPPs).
Some 1 per cent of GNP is invested yearly in the pension fund for future pension liabilities.
"I do not understand how, on one side, some say we will need it in the years 2025 to 2030, and, on the other side, some say there will be one million extra people at that time.
"I do not believe this doomsday scenario will happen."
Green Party leader Trevor Sargent said there was a need for a spur link to Shannon on the western rail corridor.
He said the line was largely in place, and there was a projected rise in population from 480,000 to 620,000.
Fine Gael leader Enda Kenny called on the Taoiseach to support the opening of the line from Sligo southwards.
He said that engineers believed it could be completed within two years.
