Electrifying the line would allow Transport for London to run longer electric trains on the route, which serves part of the London Overground network.
TfL has offered to contribute £25m towards the project’s estimated £90m costs but Ministers have failed to provide the remaining funds.
The London Assembly and local campaigners have expressed unhappiness that the work was not included in a list of infrastructure projects being funded as part last month’s Budget.
Network Rail recently told the Assembly’s Transport Committee that failure to allocate funding in 2013 could see the project’s costs spiral as the completion of Crossrail will hinder access.
The electrification project has the support of the Mayor, Assembly, local MPs and Councillors, rail industry and passenger groups.
Transport Committee Chair Caroline Pidgeon has urged Ministers to ensure funding is allocated in June, when the Government will announce its next spending round.
Responding to a letter from Ms Pidgeon, Danny Alexander, Chief Secretary to the Treasury, has said the Government’s commitment to reducing the UK’s budget deficit meant it was “not possible to secure the necessary funding” in the Budget.
However Mr Alexander expressed hope that “it will be possible to consider this proposal again” in June’s spending round.
In January 2010, 4 months before he joined the Government, Alexander signed an Early Day Motion which said the work was “urgently necessary in the interests of service efficiency both for passenger and freight trains” and urged the then Labour Government to “work with the Mayor of London and Network Rail to ensure this work is carried out.”
Ms Pidgeon said: “We were disappointed when confirmation of funding for the Gospel Oak to Barking line electrification failed to materialise in the Budget, but are hopeful that the Government will choose to sanction these line improvements as a priority when it reviews the plans in June. Electrification will deliver huge benefits to both the local area and London as a whole, including improvements to the rail network connectivity and a reduced environmental impact.
“Full funding must be confirmed this year or, due to the impact of Crossrail’s construction, costs will rise far beyond the current estimates. Confirmation this year will mean this significant milestone for Britain’s rail infrastructure can go ahead without further delay or spiralling costs.”