The South Australian Government will spend $20 million on more trams and a new 100-metre line.

The funding will pay for three extra trams and a 100-metre line from North Terrace to a new stop at the Festival Centre.

The Government had previously announced a $50-million plan to extend the tramline 1 kilometre to the old Royal Adelaide Hospital (RAH) site, which is marked for future development.

Treasurer Tom Koutsantonis said Adelaide's tram network would continue to be expanded.

“This announcement builds on that commitment,” he said.

“These new trams will increase the frequency of services, while the new stop will limit disruption to the North Terrace intersection and bring passengers right to the doorstep of the Festival Centre.”

Adelaide had an extensive tram network right out to the suburbs until it was ripped up to make way for buses and cars in the 1950s.

Recent government audits found urban public transport in Adelaide was a “key challenge”, and that expanding the tram network would be a good medium-term solution in the next five to 10 years.

Transport Minister Stephen Mullighan said the extension would boost activity in the city centre.

“While a majority of benefit will be to public transport customers, expanding our tram network will also play a crucial role in addressing the congestion challenges we face across the metropolitan area,” he said.

Work on the Festival Centre stop should be complete by the end of 2017.