The national roading agency, Transit New Zealand, is understood to have bowed to pressure in Auckland for a $200 million tunnel under Victoria Park to ease one of the country's worst traffic bottlenecks.
Transit, which has long planned to widen the Victoria Park viaduct, is said to have agreed instead to put the motorway underground in one direction.
It is understood the agency's board made the decision in closed session last week but wants to consult "key stakeholders" before confirming its plans.
Inner-city residents regard the flyover as an unsightly intrusion on valuable inner-city open space.
Supported by the Auckland City Council and the Auckland Regional Council, they have been pressing for a two-way tunnel, expected to cost about $290 million, compared with $160 million to simply widen the flyover to six lanes.
More than 94,000 vehicles cross the existing four-lane viaduct each day. Morning traffic is usually banked back towards the harbour bridge.
The Herald understands the Transit board has approved a partial underground project in principle, subject to receiving a construction grant from Land Transport NZ.
The project would be a "first-stage" solution, leaving the viaduct to carry traffic in one direction.
It is unclear which direction of the motorway would be put underground.
North Shore Mayor George Wood believes it would have to be the northbound lanes, because southbound traffic would face a difficult eight-degree climb out of the tunnel and up to Spaghetti Junction.
Mr Wood said he had not heard of the plan, but had been assured by Transit that a decision would be made this month.
The agency's chief executive, Rick van Barneveld, is due to meet the council next week.
Auckland Mayor Dick Hubbard said last night he would be "absolutely delighted" on behalf of future generations as well as existing citizens if Transit had heeded a plea from him a week ago to build a tunnel.
"Victoria Park is going to be a sacrosanct area in years to come as intensive housing developments create a great need for green space."
But the link would have to be dug deep enough to allow another tunnel to connect with a new harbour crossing he is also pushing for.
Transit chairman David Stubbs confirmed that a board decision was made last week after considerable discussion, but he said he was unable to disclose details as this was in confidential session.
But he acknowledged he had been troubled for a long time by the Victoria Park bottleneck "because a decent solution hasn't been forthcoming for my board".
"We have been frustrated for some time in our ability to get an option which stakeholders were comfortable with and which didn't cost an arm and a leg."
Transit's board initially resolved two years ago to build a widened viaduct unless regional funding could be found for another option.
But the Auckland city and regional councils, egged on by St Marys Bay residents, identified a tunnel as their preferred option without being able to come up with extra money.
It is understood one lane of the viaduct, and possibly also the tunnel, is likely to be reserved for buses as an extension of the Northern Busway.
Mr Stubbs said easing the Victoria Park bottleneck was vital for getting trucks and other heavy traffic out of Fanshawe St on the way north from the waterfront.
A new north-facing link planned for the Grafton Gully motorway extension from the port threatens to become clogged almost from the start unless the Victoria Park bottleneck is cleared.
Automobile Association spokesman Stephen Selwood said yesterday that the need for strong central and western motorway corridors was all the more pressing after the demise of the eastern highway proposal and the plan seemed "a sensible compromise".