Originally proposed in 2001, forming part of the Merseyside Local Transport Plan, it was to consist of three lines, connecting the Metropolitan Borough of Knowsley with central Liverpool.

During the 1960s and 1970s, public transport development in Liverpool concentrated on integration and expansion of the dispersed urban rail lines into a complete rapid transit network with bored tunnels and stations in the centre serving a large part of the city and Merseyside.

One of the main proposals was the creation of an Outer Rail Loop by the electrification of a former passenger route through the eastern suburbs, a six platform underground interchange station at Broad Green, and using existing lines in the west of the city.

Metrolink acted as a fast commuter rail system on the outskirts and a street running tram in Manchester city centre.

The tram network had formed part of a larger regeneration project in the areas in which it was intended to run, related to Liverpool's award of European Capital of Culture in 2008.

Although some attempts to meet this request were made, Under-Secretary of State for Transport Derek Twigg felt that the assurances of the two councils that any shortfall would be met by Merseytravel and a £24 million contingency fund were insufficient and cancelled the scheme on 29 November 2005.

[4] High hopes that the long-awaited project was finally back on track were raised even further with another announcement, a few days later, that the new business case for Line 1 was to be submitted to the DfT in the second half of 2008.

It was published by the local press in May 2008 that if Everton Football Club's relocation to Kirkby, just outside Liverpool, was granted planning permission, Merseytram would be more likely to go ahead.

[6] In November 2009 Merseytravel was given permission from local councils to seek new funding from the Department for Transport, making the £450 million project become back on track.

[7] On 8 August 2013 a campaign group was set up to bring together the individuals and businesses affected by the compulsory purchase order that was in place for a number of years.

[8] A Freedom of Information request was also submitted to Merseytravel on 8 August 2013 with a view of obtaining the details of all land/building owners affected by the compulsory purchase order.

In 2009, the then Minister of State for Transport Sadiq Khan, in the words of Liverpool Council leader Warren Bradley "virtually kills off Merseytram once and for all.

[12] In June 2019 the Liverpool Echo reported early plans for a similar light-rail or trackless electric system to connect the Lime Street area of central Liverpool to the Knowledge Quarter and Paddington Village, a route which currently suffers from poor public transport connection and traffic congestion.

Merseytravel responded by pointing out that Line One would serve a completely different market – an argument accepted by the inspector at the subsequent public inquiry.

[14] Liverpool City councillor Stuart Monkcom has been vociferous in his opposition to the tram scheme, highlighting poor financial performance of other tram networks: "In 2006, for example, Manchester's Altram accounts showed a loss of £8m due to overoptimistic passenger projections, while in the West Midlands the Midland Metro, also operated by Altram, showed losses of about £16m.