Sutton is still in the running for a tram line despite serious Government concerns over the cost of such schemes, according to the borough's London Assembley member.

Andrew Pelling said pro-tram lobby groups should not lose heart following remarks made by Transport Secretary Alistair Darling last week when he launched a white paper outlining new transport policy.

Mr Darling ruled out several other tram proposals because of spiralling costs and urged planners to put together more affordable schemes.

Mr Pelling said the white paper is based on a critical financial appraisal of trams by the National Audit Office (NAO), but the London Assembly member said Sutton's proposals would be cost-effective.

Using existing track and mostly off-road routes would increase savings, he said.

The extension to Sutton and Tooting would produce similar outcomes to Croydon Tramlink, of which the NAO was less critical.

He said: "One of the reasons Croydon Tramlink is falling short is the target was set very high to persuade the bankers to invest in the project.

"But most people who use it will know it's well patronised and gets crowded."

Mr Pelling maintains campaigners still need to fight for the tram extension.

He said: "The tram is the best way of encouraging people out of their cars it's extremely good at keeping to its timetable.

"The Sutton scheme will be much more reliable and less costly than some of the others."

Projects that had had less support elsewhere in the country had lower passenger demand, he said.

There was also more opposition based on tracks taking up higher proportions of on-road space.

Recently formed tram lobby group the South London Partnership will also continue to push the case.

Paul Cawthorne, chairman of Sutton Chamber of Commerce, is in talks with the partnership.

He said the extension would bring investment, prestige and cleaner air to the borough, and would work well with integrated transport proposals for Sutton train station.