The scheme will go ahead in its original form but the overall budget will now be £14.5bn after a value-for-money drive which will see the central tunnel works take 12 months longer than expected.
A Department for Transport statement said: “Crossrail will go ahead to the original scope.
“Government has already identified substantial, engineering-led, savings to the Crossrail funding package, including through lengthening the delivery programme for the central tunnel works by around a year.
“Crossrail Ltd will also be doing further work to optimise the scheme’s value for money, including reviewing the way in which services come into operation across the route to ensure that Crossrail services commence in a resilient and robust way.
“As a result, the funding envelope for the project will be reduced by around £1bn, while the scope of the project remains unaltered. We now expect the project to cost no more than £14.5bn.”
Terry Morgan Crossrail Chairman said: “We welcome today’s strong statement by the Government of its firm support for the project. Today’s decision removes any remaining doubt that Crossrail is going ahead and that it will be built in its entirety.
“Crossrail is looking at engineering-led solutions and re-programming of the central tunnels construction programme to make substantial savings.
“Crossrail will persevere in delivering value for money and we continue to find the most cost effective solutions to deliver this world-class affordable railway.”