The Friends of the 1825 Stockton and Darlington Railway have drawn up preliminary proposals to develop the 26-mile path along the line.
The heritage group feels that visitors to the route, which runs from Witton Park Colliery, near to Bishop Auckland, to Stockton, will provide an economic boost to the area.
The scheme is being backed by Durham County Councillor Trish Pemberton, who covers Shildon.
She wants to tap into the plan’s potential to rejuvenate businesses in the town.
She said: “In Shildon we have to exploit our railway heritage as much as we can.
“I think that the cycle and footpath is an absolutely fantastic idea, both as a history teacher and as a county councillor.
“I believe that tourism is a really important weapon in our armoury which we can use to help boost the economic regeneration of the town.
“It would be great if we could entice people to go onto the high street to spend money.”
Coun Pemberton has also signed up to the help The Brusselton Bridges Preservation Group as it tries to repair two damaged bridges which formed part of the Darlington and Stockton Railway.
The Accommodation and Milk Road bridges, at Brusselton, near to Shildon, were damaged last July.
Efforts to repair the bridges have stalled as their owners cannot be found.
Once the bridges are repaired Coun Pemberton hopes they will attract rail fans who she hopes will then visit Shildon high street.
Locomotion: The National Railway Museum at Shildon already attracts an estimated 200,000 visitors to Shildon annually, but most do not venture into the town centre.
Coun Pemberton is also hopeful of enticing more of the museum’s visitors to spend money in Shildon.
Pam Porter, events officer at Locomotion, said: “We would like to find out more about this.
“The museum is always looking at ways that it can work with other groups to help develop opportunities for Shildon and the surrounding area.”