Construction of a $7 billion train link between Laos and China will go ahead next year after a Chinese bank threw a financial lifeline to the stalled project, state media reported Friday.

The two countries had initially agreed to jointly fund the line, which will run from the Chinese border to Vientiane, but Beijing pulled out over reported concerns about profitability.

Chinese state-run EXIM bank has now stepped in with a loan offer for Laos, an official from the public works and transport ministry told the Vientiane Times, adding the pair were "now ironing out the details" of the loan.

Another official at the ministry confirmed to AFP that discussions on the details of the loan were underway along with consultations over the route.

"The work has not started yet, but we plan to finish it in five years," said the official, who did not want to be named.

A Chinese firm will carry out the construction, the Vientiane Times report said, describing the project as the biggest ever infrastructure scheme undertaken by communist Laos.

It will be a link in a vast network set to connect the southwestern Chinese city of Kunming with Singapore.

Landlocked Laos, one of Asia's poorest countries, has no railway apart from a short stretch of track near the Thai border.

Under current plans the new Boten-Vientiane line will be 420 kilometres (260 miles) long and require 76 tunnels and around 150 bridges to be built as it carves through Laos, the report said.

Passenger trains, which will run at up to 160 kilometres an hour, will stop at 31 stations once work is complete, it added.

The scheme has stirred controversy in Laos with the proposed route likely to force thousands of people to move from their homes.

Construction on a separate $5 billion 220-kilometre line linking southern Laos and Vietnam is set to start in January, the Vientiane Times reported Thursday, after financing from a Malaysian investor was secured.