The unused tracks are at the centre of a debate that has been raging for more than a year.

In one camp is the North East Railway Company, who are proposing to restore the lines for a heritage passenger rail service.

The other corner holds the Dorset Council, who received federal government funding to rip up the tracks and replace it with a cycle and walking trail to connect with similar rail trails in the region.

After two feasibility studies into the viability of heritage rail offering up conflicting advice, Infrastructure Tasmania was tasked with weighing up the costs and benefits of the two proposals.

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It released its final report into the rail trail on Thursday, offering up a compromised solution for the network of tracks.

The state government’s compromised solution has part of the track developed by the Dorset Council for a bike track, with the other part of the tracks to be used for the heritage rail service.

A 20-kilometre section of the track, which runs from Lilydale to Coldwater Creek is proposed by the government as a two-stage roll out of the heritage rail project.

The first stage of the rail trail would be from Lilydale to Turners Marsh. The second stage would be to extend the track from Turners Marsh to Coldwater Creek.

North East Railway Company board member Stuart Bryce said the decision was “disappointing” and a “non-decision”.

“The government doesn’t have a mandate to rip up those rails,” Mr Bryce said.

“It’s like finishing a war and saying we both won.”

Mr Bryce said there were still a few hurdles for the council and the government to pass before the cycle track could go ahead.

“We will not give up.

“It has to pass both the lower and upper house and then be put through planning at Launceston and Dorset,” he said.

Mr Bryce would not commit on whether the railway company would support the proposal as it stands.

However, he maintained the heritage rail service was viable.

“We are in a pretty good position. There are only two bridges to repair,” he said.

He said they would aim to lobby the Legislative Council to hold an inquiry into the matter.

Treasurer Peter Gutwein said both proposals had merit, which was why the government had decided to support both proposals.

“It is clear that both projects have the capacity to generate economic and employment benefits, both directly and indirectly,” he said.

Dorset Council mayor Greg Howard described the solution as a “sensible compromise”.

“This proposal gives both parties the opportunity to have both options,” he said.

“It will bring quite a few thousand riders to be able to spend three days in the area.”

Dorset Council received federal government funding to support its cycle track and has a deadline of December 2019 to have the project realised.

Councillor Howard said the council would hope to have a development application ready by its August meeting, with a tender process to follow.