The £27m Crewe Green Link Road project will run between the A500 Hough-Shavington bypass and the A5020, and create a bypass for Crewe.
The Government has now approved £15.6m funding towards the project, allowing work to start.
The scheme will improve access to the A500 and M6 and alleviate traffic passing through the town.
It is also hoped it will unlock two major development sites at Basford, creating up to 12,500 jobs over the next 20 years.
The scheme requires a bridge to be built to carry the railway over the new highway and will involve a rail possession and closure of the line.
Morgan Sindall was appointed on an early contractor involvement basis last year and will complete the work within an allocated £19m contract.
Transport Secretary Patrick McLoughlin said: “This scheme is great news for Crewe and will support the economic growth and regeneration of the town, including the ‘All Change for Crewe’ strategy.
“The £15.6m we are putting into this project shows that the we are serious about investing in the infrastructure the country needs to drive economic growth, both locally and nationally.”