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It is currently single track, meaning only one round trip per hour is possible.
A second platform at Burneside and line speed and level crossing improvements are also included in the bid.
A county council spokesman said the passing loop would run west from Burneside and would enable trains to pass each other without having to slow down.
He said the current single track set-up "limits its ability to support the visitor economy and restricts local community access via rail to health, education and other key services".
Keith Little, cabinet member for highways and transport, said it was an "exciting proposal", adding:
"We believe creating a dynamic passing loop as part of a major investment in the Lakes Line would be hugely beneficial and help deliver a rural transport exemplar which better meets the needs of our residents, visitors and businesses."
Full article:
The BBC - Cumbria Council submits bid for Lake Line improvements
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