The decision was taken at a meeting of the state cabinet, which also gave its nod to an ambitious IT Policy, official sources said.
The 9.41 km line between Dilshad Garden and New Bus Stand in Ghaziabad will have seven stations, they said, adding Rs 15,591 crore would be spent on the project.
The Centre will spend Rs 344 crore, Delhi Metro Railway Corporation (DMRC) Rs 256 crore and the Ghaziabad Development Authority and some other departments Rs 991 crore.
The line will cover Shaheed Nagar, Raj Bagh, Ranjendra Nagar, Shyam Park, Mohan Nagar, Arthala and New Bus Stand stations.