The new route will normalise biking to school for children, and help to relieve congested areas around schools as the population of Whangarei grows, he said.
"The biggest winner is health and well-being."
Plans have been accelerated as a result of the funding boost and work will start on the Kamo route early next year, with completion in mid-2018.
New Zealand Transport Authority regional director Ernst Zollner, said cycling was a key priority for the agency.
"Getting more New Zealanders cycling will connect people with a greater range of employment, education and social opportunities and contribute to a more environmentally sustainable future for our transport network." The nationwide cycleway programme will see $296 million invested over the next three years.