By David Shepardson

WASHINGTON (Reuters) -The Biden administration plans to award a $6.88 billion grant to help build a new railway tunnel between New York City and New Jersey, the largest ever federal transportation grant for a single project, Senator Chuck Schumer said on Thursday.

The $16.1 billion Hudson Tunnel Project will repair an existing tunnel and build a new one for Amtrak and state commuter lines between New Jersey and Manhattan. The project has been debated in Washington for a decade since a New York City-area rail tunnel built over a century ago was damaged in 2012 when a massive storm flooded parts of the city.

Schumer is holding a press conference on Thursday to announce the grant. The Transportation Department did not immediately comment. New Jersey and New York are expected to put up about half the $16.1 billion cost.

Last month, U.S. passenger railroad Amtrak said it had applied for $8 billion in government grants to modernize bridges, tunnels and other aging infrastructure along the busy Washington to Boston corridor.

Amtrak is seeking funding for $7.3 billion in Northeast Corridor projects including several in the Gateway Program such as the New York Penn Station Expansion and Sawtooth Bridges replacement.

The Gateway Program aims to overhaul much of the aging infrastructure in the Northeast Corridor rail line between Newark, New Jersey, and New York City. In April 2021, Amtrak asked Congress for $16 billion for the project, including $6.7 billion over five years for the Hudson Tunnel.

Congress approved $66 billion for rail as part of the 2021 massive infrastructure bill, with Amtrak receiving $22 billion. The bill also sets aside $36 billion for competitive grants, which Amtrak is looking to tap to help fund replacement or rehabilitation of tunnels, bridges and other aging infrastructure along the Boston to Washington corridor.

(Reporting by David Shepardson; Editing by Richard Chang)