Two other new stations, one 33m below Pitt St and the other 11m below Albert St, will survive.
Transport planners expect to save $154 million from the change, plus $330 million from decoupling new trains from the project.
Auckland Mayor Len Brown says the savings make a 2016 start date "even more realistic" against the Government's reluctance to pay its half share of construction and property costs before 2020, unless accelerated rail patronage and job creation targets are met.
Those costs, minus new trains and improvements still envisaged elsewhere on the rail network, will amount to about $2.25 billion under the latest proposal.
Mr Brown said a project review showed the rail tunnels could be opened using electric trains already rolling out across the city.
Auckland Transport chairman Lester Levy said the new plan would reduce journey times, minimise construction disruption in Upper Symonds St and reduce property purchases.
The upgraded Mt Eden rail station would be connected to tunnels carrying trains to and from Britomart, above. Photo / Greg Bowker
Only 67 surface properties will be needed, six fewer than previously, allowing several buildings housing technology businesses between Symonds St and Dundonald St to remain.
Dr Levy said a separated east-west rail junction would also increase reliability, because lines would not need to cross one another, avoiding hold-ups between opposing trains.
The amended plan also includes a new road past Mt Eden station, offering two alternative links between Mt Eden Rd and New North Rd.
A downside will be an extra 400m uphill walk for passengers heading to Symonds St.
But an Auckland Transport spokeswoman predicted an average two-minute saving for 3000 passengers each day from one fewer train stop, against five minutes added to journey times for just 95 facing longer walks.
She said mixed residential and commercial developments would fit more easily in the trough around the station than on the Symonds St ridge where high-rise buildings cannot obstruct volcanic view shafts.
Waitemata board chairman Shale Chambers said a 30-year plan to breathe new life into Newton would have to be "revisioned".
But he acknowledged the change lent opportunities in Eden Terrace "for some significant developments where heritage and viewshafts don't impact".
Uptown Business Association manager Gary Holmes said the removal of the Newton station from the plan would spare retailers 18 months to two years of disruption from construction around Upper Symonds St.
Auckland Council transport chairman Mike Lee said it was a major strategic decision which should not have been taken without consulting council transport staff.
Cost of City Rail Link
$2.862b
Previously
(inflation adjusted to 2021 and including $476m for extra trains and rail network improvements)
$2.378b
Now
(after $154m net savings on stations and minus $330m for trains)
$484m
Total reduction