The federal government has rejected a $42m grant request to complete the 54km missing link of the Northern Rivers rail trail, despite strong support from local councils.

The project, which would connect canefields in the Tweed River area to coastal towns like Byron Bay and Mullumbimby, faces a setback as authorities prioritized smaller projects.

Councils from Byron, Lismore, and Ballina had lobbied for the funding, citing economic and social benefits including eco-tourism, safety improvements, and regional connectivity.

The rejection has disappointed advocates who see the rail trail as a vital economic lifeline for a region struggling with declining GDP and climate-related disasters.Supporters argue the trail could transform the area into a sustainable tourism hub, combining natural beauty with cultural attractions.

Meanwhile, efforts to revive rail services through solar-powered trains and bike paths continue, with advocates emphasizing the need for community-driven solutions to secure long-term investment.