Wales' First Minister Carywn Jones said: "We have lobbied hard for a City Deal for the Cardiff Capital Region and put more than £500m on the table to support improving transport infrastructure within the region. Today’s announcement sees that vision become a reality – it is a vote of confidence in the region and a huge economic boost.
"Central to the success of a City Deal is the close collaboration and partnership between all ten local authorities. It is a great example of what can be achieved by coming together for the greater good of our Capital region."
Finance and Government Business Minister Jane Hutt said: "This is an important milestone and the culmination of months of detailed negotiations. Working closely with the authorities involved, we’ve managed to secure an additional £425 million to support targeted initiatives in the South East Wales region. With the local authorities contributing £120 million, the total investment is significant.
"The additional investment by us and UK Government acknowledges the case made by the authorities for how they can drive economic growth in the region. The Deal signed today will have a positive long term economic impact across the region.