After months of talks, the Bavarian government, industry leaders and Deutsche Bahn rail company signed an agreement to build the line after a late-night deal capped with a champagne toast.

Authorities said they had finalised 1.85 billion euros (2.6 billion dollars) in financing for the next-generation train line, which is to connect the state capital Munich with its airport, 37 kilometres (23 miles) away.

Starting in 2014, travellers will see the 40-minute trip cut to just 10 by the driverless Transrapid, or Maglev train, which is able to run at 450 kilometres (280 miles) per hour.

Bavarian premier Edmund Stoiber, who is to leave his post and also step down as head of the regional conservative CSU party, hailed the deal while denying he had got a golden "going away present" as critics have claimed.

"The Transrapid is a beacon of high technology 'made in Germany'," Stoiber said.

In all, the German government is to pay 925 million euros, Bavaria to contribute 490 million, the German state rail company 235 million, Munich airport 100 million, Siemens and ThyssenKrupp 50 million and the European Union 50 million.

But German Finance Minister Peer Steinbrueck warned that the advertised price was based on an outdated, five-year-old calculation.

"The project will be much more expensive. There is no way that the cost will stay at 1.85 billion euros," he said.

"If Premier Stoiber wants to pay the difference, be my guest. But he needs to know that the federal government is covering 50 percent of the 1.85 billion euros: 925 million -- that's it."

Munich's centre-left city government has complained that the cost is too high, and 60 percent of Bavarians oppose the plan too, according to a poll in late August.

The Maglev, designed and built by engineering groups Siemens and ThyssenKrupp, is meant to represent German prowess in rail technology.

But a test train collided in September 2006 at 170 kilometres an hour with a parked maintenance vehicle, killing 23 people.

European plans to build a working version of the Transrapid have been on hold since the crash.

The only operating line is in China where the Maglev whisks travellers between Shanghai's financial district and the city's Pudong airport along a 30-kilometre track.

But the extension of the line has been postponed and recent political differences between Berlin and Beijing could set those plans back even further.

A proposal to link the northern cities of Berlin and Hamburg broke down in February 2000 and convincing the federal government to back the Bavarian project required tenuous negotiations.

Elsewhere, a mooted plan exists to link Teheran with Iran's holy city of Mashad, 800 kilometres to the northeast, but it is still in early stages of planning and there again, political problems could scupper a deal.

Interest has been expressed in the Maglev train in the Arabian pensinsula, the Netherlands and the United States but nothing concrete has emerged so far.

The Transrapid also has two rivals close to home, the German ICE and French TGV high-speed trains.

On April 3, a supercharged TGV smashed the world speed record for a train on rails, hitting 574.8 kilometres per hour, nearly half the speed of sound, on a new high-speed line in northeastern France.

The ICE and TGV can also run on normal train tracks, while the Maglev operates only on an expensive custom-built line.

But Tuesday's announcement meant the Maglev should finally get a chance to play at home, and possibly pave the way to more away matches as well.

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