The Great Central Railway's plan for a new museum, to be built in Leicester, is expected to cost £15million in total.
Alongside the proposed £10million lottery grant, submitted to the National Heritage Fund, £5million of additional match funding would be required.
A striking building is planned for construction, alongside the Great Central Railway's Leicester North station where the museum will be connected to the running lines, allowing for inter-changeable displays.
Drumming up support for the project, City Mayor Sir Peter Soulsby said:
The proposed railway museum to be built in Leicester could create up to a thousand new jobs.
An economic impact study, carried out as part of the £10million funding bid, suggests the project will be worth £43million to the local economy over five years.
Leicester City Mayor, Sir Peter Soulsby, has called it an exciting opportunity to enhance the city's reputation as an important visitor destination and said:
Along with 300 short-term construction jobs, annual visitor figures are expected to reach 230,000, and so additional spending could create more than 900 jobs for the surrounding area.
The Great central Railway have submitted a bid for £10million to the Heritage Lottery Fund. for the building of a new railway museum in Leicester.
Filled with priceless artefacts from the national collection, the new attraction will be based at GCR's terminus in Leicester North.
Plans for the new museum have been described as "world class" and Managing Director of the Great Central Railway Bill Ford said:
A bid has been put forward for lottery funding to help pay for a new railway museum in Leicester.
If the £10 million grant is given by the Heritage Lottery Fund, a new tourist attraction would be created at Leicester North.
The site is the terminus for The Great Central Railway, who are running the project in partnership with Leicester City Council and the National Railway Museum.
A rare collection of treasure, with artefacts 4,500 years old, is going on show at a Midland museum.
Every item in the exhibition has a fascinating story which sheds light on the history of the county in which they were uncovered.
A new exhibition that features an array of finds from 4,500 years ago to the 17th century, will be on display in the midlands today.
One of the centre-pieces of the exhibition will be the Hallaton Treasure, a stunning collection of Iron Age and Roman finds, including one of the largest collection of ancient coins. They will be on show at Snibston Discovery Museum in Coalville, Leicestershire.
Nick Boles, the Conservative MP for Grantham and Stamford, has welcomed plans for a Margaret Thatcher statue.
One of the country's largest bubble car museums based in Lincolnshire has moved after simply running out of space at its old site. Staff have moved their collection of 30 cars from Byards Leap to a larger building at Langrick, near Boston.