Regions bogged down by the recession are celebrating after getting funding for the first stages of a national cycleway expected to attract tourists and get businesses going.

Prime Minister John Key yesterday announced $9 million for the first seven sections of the cycleway, which will eventually link Kaitaia with Bluff - an idea born out of the heavily hyped Job Summit.

Labour claims he has already over-promised on the benefits of his "pet project".

Construction on the seven cycle trails, some of which are already partially built, is expected to begin as early as summer.

Two of the seven are in the Ruapehu District, and mayor Sue Morris was buzzing yesterday.

"It will be huge. It will definitely create the employment opportunities that we have been looking to have for some years," she said.

Ms Morris said there had been a bit of a downturn with industry closing and downsizing in the district "so it was pretty grim".

Mr Key predicted the cycle trails would be a "magnet" for foreign tourists, and "invigorating" for the regions.

"I'm not arguing it is going to save New Zealand from the economic recession we are in. But I think it's one of the things we are embarking on as a result of the Job Summit, and I think in years to come, and I think quite frankly for centuries, people will look back and say that was a really good idea."

The Government estimates close to 300 jobs will be created from the construction of the seven trails, rising to 500 per year as supporting businesses are developed.

Labour leader Phil Goff said Mr Key's announcement was a "watered down version" of the project.

"John Key originally claimed his cycleway would create nearly 3700 jobs but ... he has admitted that there may be as little as 160 created. He's pedalling backwards at full speed."

Mr Key seized on the success of the existing Otago Central Rail Trail - worth $7.2 million to the Otago economy and supporting 75 jobs.

The planned Southland/Queenstown Lakes Around the Mountain Rail Trail, linking to the Otago trail, would mean huge economic benefits, said Southland District mayor Frana Cardno. "It's difficult to be able to survive sometimes. But this means that the small hotels, the small coffee bars, the backpackers in these communities - it makes them viable. And if people are able to stay on in these communities, that means we keep the schools, and it's just fantastic for them."

Thirty kilometres of the Waikato River Trail is already in use, attracting 4000 visitors a year, and the Government money will push the remaining 70km along.

"We are absolutely thrilled to be selected," said Waikato Rail Trails Trust chair, Ali Van der Heyden. The Green Party worked with the Government on the cycleway, and Green MP and cycling advocate Kevin Hague saw the venture becoming a "star in the international cycle touring world".

Mr Hague rode the national cycling network in Britain, which has just celebrated more than one million users per day and is returning up to £40 ($100) for every £1 spent.