The Chelsea to Hackney Line included plans for new stations at Sloane Square and King's Road.
But in a consultation on the issue last year to safeguard the route against future building work, the Department for Transport announced it was not building the Sloane Square station and failed to provide an explanation.
Council deputy leader Daniel Moylan said: “We made it absolutely clear to the Government we wanted the station back on the agenda.
“We are keen to see the scheme taken forward as soon as possible. We think it would transform the public transport options available to Chelsea residents, and help assure the area’s continued economic viability.
“We are very relieved the Government has listened to us and decided to keep all options open.”