The steam service will travel weekly from Machynlleth, Powys, to Porthmadog from Mondays to Fridays between 28 July - 29 August.

The service will extend to Pwllheli on Wednesdays and Fridays.

Gwynedd county councillor Margaret Griffith said she had been pressing for the service to be extended.

"It is only fair that the passengers are able to choose between Pwllheli and Porthmadog," she said.

Porthmadog councillor Ieuan Roberts said the return of the steam service was welcome news for local businesses.

"There is no doubt that they benefit from the service, for many of the passengers have been seen walking along Porthmadog's main street during the train's stop in the town.

"Both the Ffestiniog Railway and the Welsh Highland Railway also benefit," he added.

Rail company commercial director James Shuttleworth said he hoped travelling to Pwllheli would "open up the potential of the Lleyn peninsula".

'Warming the market'

He said he had no figure for the number of passengers who travelled by steam last year, but it had been "a reasonable success, sufficient to give us confidence".

It was the combination of "nostalgia, history and a fabulous railway, resulting in a good day out", which was appealing, he said.

"Enthusiasts do come but the core market is the holiday market and families. We've found that an awful lot of children have never been on a train."

Travelling by steam train "warms the market" for other train travel, he added.

"It takes away from it being an endurance on the 0815 into Waterloo.

"We spend our lives trying to get there faster: this is slowing it down," he added.

The train will leave Machynlleth daily at 1005 BST returning at 1700, stopping at Dovey Junction, Tywyn, Barmouth, Harlech and Minffordd.