Earlier official estimates put the cost of the railway, started in July and scheduled for completion in six years, at $2.4 billion.

Fu gave no explanation for the rise but critics say the railway is an impossible feat of engineering, with much of its length to be laid at more than 4,000 metres (13,100 feet) across permafrost.

Officials say those building the railway are putting in four-hour shifts to avoid exhaustion and altitude sickness.

Fu said this year's construction work, starting from the city of Golmud in Qinghai, was expected to be completed ahead of schedule despite the harsh climate and track-laying would begin in July next year.

"The low atmospheric pressure, lack of oxygen, high elevation and extremely cold, dry strong wind and sunshine of the Tibet-Qinghai plateau cause great impact on people's health and work capacity," Fu told a news conference.

All the funds for the project would come from state coffers and it was certain to lose money over the short term but would eventually be profitable, he said.

China says the railway will kick start economic development in the region, but pro-Tibet campaigners say it will benefit mainly ethnic Han Chinese migrants and accelerate economic exploitation of the Himalayan region.

Critics have also expressed concern that the railway will disrupt the fragile ecosystem of the Tibetan plateau, inhabited by several rare species, including black-necked cranes.

But Wang Yuqing, deputy director of the State Administration of Environmental Protection, said the government would invest up to 1.2 billion yuan to protect the environment around the tracks.

Among other environment-friendly measures, the project will include tunnels for the endangered Tibetan antelope and other animals to go under the tracks, Chinese officials say.