The scheme involves extending the existing Trans Siberian railway, with a bridge from the Russian mainland to the island of Sakhalin. The new train route will then continue south for 380 miles across the Russian island, before reaching the coast. A 25-mile tunnel will be constructed under the Soya Strait, taking the train onto Japanese territory.
It will enable direct rail transport from London to Tokyo in around two weeks.
And officials in both countries are hopeful that the new route will enhance trade between the nations.
"In terms of natural resources, this rail link would be a very positive development," Koichi Yamagishi, director of overseas projects at Japan's ministry of transport, told The Daily Telegraph.
"To have direct access to the Sakhalin 1 and 2 oil and gas projects would be very beneficial."
The project was first imagined by Stalin in the 1950s, with construction of the tunnel between Russia and Japan actually beginning. But the plan was abandoned on Stalin's death in 1953.
Almost 60 years later, Vladimir Putin revived the idea, saying in 2011: "It is also possible to connect (our railways) directly with Japan by a tunnel.
"It is a grand project that will drastically improve our efficiency of physical distribution."
A delegation from the Sakhalin Oblast government met senior officials of Japan's ministry of land and transport in Tokyo on May 29 and outlined the plan. Japan has proposed further discussions, at the vice-ministerial level, in August.
The idea of a tunnel or bridge to Hokkaido has come up in discussions in the past but made no tangible progress due to a territorial dispute between Japan and Russia.
Soviet troops invaded a chain of Japanese-held islands off Hokkaido in the dying days of World War II and forced the inhabitants to leave.
Tokyo has demanded the return of the territory but has been consistently rebuffed. The row over the islands is the reason that Tokyo and Moscow have never signed a peace treaty to officially terminate the war.
There are indications, however, that both countries are now keen to improve their ties and there are proposals that Russia and Japan undertake joint development of the disputed islands.
Japan is in part motivated by a need to access Russian natural resources, particularly natural gas, as its nuclear reactors remain idle after the Fukushima disaster in March 2011.
The first phase of the Russian plan is to start work in 2016, with no date for completion made public.
The total cost of the project is estimated at £6.4 billion.
