"The Twin Coast Cycle Trail is one of 23 Great Rides across New Zealand, 18 of which are already complete and open and which cover more than 2500km of country," he said.
The national network has been considered Mr Key's baby after he launched the project in 2009 with the objective of creating a high quality tourism asset to boost regional economic growth.
The new operating funding brings the total Government contribution to the Northland trail to $7 million.
Mayor John Carter said the $3 million grant will offset most of the costs needed to complete the Horeke-Okaihau, Kaikohe-Kawakawa and Kawakawa-Taumarere sections of the trail.
The council now had all the agreements it needed with the owners of private land the trail passes over.
Mr Carter also said the council and other stakeholders were looking at the feasibility of putting cycle trails down Northland's west and east coasts, in "a project all Northlanders will benefit from."
Yesterday's funding announcement release gave Mr Key and Green Party MP Russel Norman some play time together at the Opua end of the trail. Mr Key said the Green Party's backing for the national project had been a major factor in its success.
Mr Norman described the new Northland funding as a great opportunity for the region.
"It is great for the North, great for cyclists and we are proud to be here today part of the announcement," he said.
Mr Key was in the Bay of Islands primarily to attend the National Party's first regional conference since the general election last year.
Of the more recent byelection, Mr Key said;
"There are always lessons to be learned in defeat, and we are working together to understand what went wrong and to take those lessons on board."