The Mayor of London has ordered Transport for London (TfL) to look at the viability of bringing trams to Sutton as part of plans to extend the network.
Boris Johnson has asked TfL to carry out a feasibility study to see how the tram system would be extended to the borough.
Last week representatives from TfL walked along a proposed route which could see the town centre linked to St Helier Hospital and potentially Mitcham or Wimbledon.
Boris Johnson wrote to London Assembly member Steve O'Connell this week to tell him Sutton was one of three "potential priorities" for extending the network.
TfL has drawn up a strategy on how to improve the Tramlink network and in it possible extensions to Sutton, Crystal Palace and Bromley have been identified.
However, Crystal Palace appears to be at the forefront of the Mayor's plans as he believes it is most "developed in terms of feasibility," although he said he would be "keen to see these extensions go ahead."
TfL is now looking at the engineering infrastructure in the borough as well as potential costs and benefits.
No cost has yet been set but a similar extension to the existing 28km light rail system planned to Crystal Palace was put between £62m and £170m.
Mr O'Connell, who lobbied the Mayor on behalf of the borough, said the tram has been at the top of everyone's wish list for Sutton.
He said: "The tram will give Sutton the transport infrastructure it has deserved for a long time and give its residents access to a 21st century transport network.
It would link the town centre to St Helier Hospital and give people better connectivity and make it easier to get to Wimbledon and Croydon."
Councillor Ruth Dombey, leader of Sutton Council, said: "We have lobbied very hard to bring Tramlink to Sutton. Representatives of TfL came to the borough at our invitation and we walked them along the possible route to show the huge benefits that the trams would bring."
Conservative councillor Tim Crowley said: "I am delighted that Boris Johnson after extensive lobbying from local Conservatives and our GLA member Steve O Connell has today decided to make good on his promise made to me in Sutton before the Mayoral elections and has fired the starting gun on the process of getting Tramlink to Sutton."