First Minister Alex Salmond said the scheme will be completed over the next five years.
The works will result in:
• The re-doubling of the track between Aberdeen and Inverurie
• Platform extensions to accommodate six-car trains at Insch and Elgin
• Signalling improvements at Elgin to improve reliability
• A new relocated station at Forres
• A loop extension of the track at Forres
• Infrastructure to allow for new stations at Dalcross and Kintore.
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An enhanced timetable has also been unveiled and will immediately increase the number of services for passengers.
Minister Salmond said: "I am determined that we continue to seek improvements to Scotland's train infrastructure, ensuring that we have an efficient, reliable and comfortable service for passengers in communities across the country.
"That is why today's announcement is so important – a huge £170 million investment on the Aberdeen-Inverness line that will make journeys shorter, more frequent and more comfortable for those who use this important line regularly.
"These improvements – which will increase the number of trains, improve signalling and lay the infrastructure necessary for new stations, will be welcomed by passengers, who will also be pleased to hear of the service enhancements that will see their timetable improve in the coming weeks.
"This investment is all part of our programme to ensure Scotland has a railway fit for the future and our £5 billion commitment to rail infrastructure and services is addressing decades of neglect on the railways throughout Scotland."
(JP)
