The executive has transferred £27m of funds from the budget allocated to the A5 Derry to Dublin road.
The project will now begin in July 2012, rather than in 2014- the first stages of new improved service are predicted to be up and running by April 2013.
According to a report by the BBC the upgrade will be completed in three phases. Starting with track relay and essential bridge works, then followed by the signalling work and the final phase will complete the passing loop and remaining bridge works.
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The scheme was originally halted due to budget pressures.
In August, the Stormont Transport Minister, Danny Kennedy announced that a planned upgrade would be delayed due to a lack of funding.
Then Translink's General Manager of Rail Services, Mal McGreevy, confirmed that even if the money was available, the 2013 deadline could not be met.
Mr McGreevy also ruled out a new train halt at Derry City Airport.
Minister Kennedy commented: "Prior to the budget, Translink had planned to start this major £75 million project in 2012.
"However, as a result of the budget and to avoid disruption to Londonderry's UK City of Culture Year in 2013, it is currently intended that the start will be deferred until 2014.
"There has been funding of £20 million allocated to the 2014/15 budget to allow the project to start at that time."
Since the announcement to delay the project the Chairman of the Londonderry's City of Culture Company wanted the NI Executive to reconsider their plans to postpone the development and make the rail link a priority.
According to another report by the BBC the Chairman, Martin Bradley, had written to members of the Stormont Executive urging them to back an emergency motion.
He told the BBC: "This is a key infrastructural piece for the city."
(LB/BMcC)
