Neil Scales, Chief Executive and Director General of Merseytravel, said:
''My decision to re-tender has been totally vindicated. Line 1 will now be built, subject to final contractual arrangements, on time and below budget - a vast improvement on the situation we faced two months ago.
'The scheme will benefit massively from the fact that Laing O'Rourke is currently heavily involved in developments in Liverpool.
Merseytravel shortlisted nine organisations in February after the competition was reopened following the rejection of the Baflour Beatty's Mersey Express Tramway bid.
Two of the original consortium members, operator Keolis and Parson Brinkerhoff, have been retained while design and ancillary work on Line 1 has continued during the selection process for a new contractor.