Eleven initiatives were selected in the Yorkshire and Humber region with the University of Huddersfield being the only higher education institution to be lead partner in a selected project.
The funding will enable the creation of a Centre of Innovation in Rail.
The University is already home to the Institute of Railway Research, which itself welcomed the Secretary of State for Transport, Patrick McLoughlin MP, earlier this year.
The Institute of Railway Research (IRR), which has 16 researchers based in a suite of specially-equipped labs, is involved in a wide range of projects with partners that include Network Rail, London Underground, TATA Steel and the Rail Safety and Standards Board.
The IRR plays a major role in the safety and environmental sustainability of the railways of the future and key areas of research focuses on rail vehicle dynamics and the interface between wheel and rail.
Current projects include European Framework 7 collaborations that aim to increase the sustainability, competitiveness and safety of rail freight. The IRR team are also investigating wheel damage mechanisms, development of track alignment faults and lightweight vehicle components.
The IRR also works with operators of light railways and metro services, whose problems with the wheel-rail interface are different to those of the heavy rail operators.
The Institute is headed by Professor Simon Iwnicki, who is also co-chair of the Rail Research UK Association and has a global reputation for his work on many aspects of railway technology, especially the crucial interface between wheel and track.
"I am delighted that the Government has agreed to support our bid for the Centre of Innovation in Rail," said Professor Iwnicki. "There is still much work to be concluded on the detail of the project and discussions will be taking place over the coming months. This is an extremely exciting enterprise for the Institute and our work and for the University as a whole.
"The project will build upon the world-class R&D, training and innovation capabilities of the project partners to provide the rail industry and its supply chain with fundamental and applied research and other services to address identified challenges in engineering, safety, risk and skills.
"It will develop tools and techniques, embed these, and undertake knowledge transfer activity to improve competitiveness of the UK railway. It will also provide high level training and skills development for current and potential future rail industry employees."