Advocates for the project, which would include a development and transit plaza on a city-owned lot at 4th and Wisconsin Ave., have said the extension will link Westown and the new Bucks arena with the Third Ward and downtown.
The Fourth St. extension is also seen as pivotal to eventually connecting the streetcar with the Bronzeville and Walker's Point neighborhoods.
The extension would be paid for in part with the money from three TIF districts, one of which is new, approved by the council Wednesday. The city has applied for $20 million in federal funding to cover the other half of the project.
"This money will not be spent unless the (federal) grant is awarded to the city," said Ald. Bob Bauman, who voted for the extension.