The Ōmōkoroa Road upgrade will now go ahead, after the Western Bay of Plenty District Council and the New Zealand Transport Agency reached a funding agreement.
The $8 million project, which the New Zealand Transport Agency will fund 51 per cent of, will be from Western Avenue to Tralee Street.
Western Bay of Plenty District Council mayor Garry Webber said this "strategic" piece of road is critical to cater for population growth in the area.
"The project will provide a safer environment and amenity for residents, motorists, cyclists, and pedestrians," said Webber.
Construction will include the relocation of underground services and power lines as well as upgrading stormwater pipes and widening the road.
Improvements for pedestrians and cyclists include a shared pedestrian/cycleway, new bus stops and two new bus shelters.
The project adds to the upgraded section of Omokoroa Road that the council completed in 2018.
New Zealand Transport Agency's acting director of regional relationships, Ross I'Anson, said the project will ensure Ōmōkoroa Road is "fit for purpose".
"Omokoroa is a busy urban community and it's important the local infrastructure is safe for the growing number of people using it," he said.
"It's good to see the project includes public transport improvements and amenities for pedestrians and cyclists."
The council will consult with landowners and other stakeholders before finalising the draft design and going to tender in early 2020.
They expect the project to be delivered in two stages, with the upgrade completed by 2021.
Some disruption to traffic can be expected while construction is ongoing and traffic management will be in place.