The approval was given by Union Urban Development Minister Kamal Nath when Chief Minister Sheila Dikshit led a high-level delegation to him.
Delhi Government has already asked Delhi Metro to prepare a detailed project report within three months for the 11-km-long network linking Shastri Park with Laxmi Nagar via Trilokpuri.
The entire stretch will have a total of 12 stations.
"The Union Urban Development Minister gave a green signal to the project. He even asked us to plan for more such networks," a top official who was present in the meeting said.
The DMRC will look after construction and commissioning of the network.
The city government plans to call international tender for the project after finalisation of DPR.
The Government was considering extension of approved Mono Rail network to Delhi University, Kashmere Gate and Chandni Chowk which will facilitate large number of students and traders to commute between both sides of river Yamuna.