Around 4.2km of path will be built on the eastern side of Taipairu Rd and State Highway 2.
"We are thrilled to see progress on these plans to better connect Waipukurau and Waipawa," Central Hawke's Bay mayor Alex Walker said.
"To provide safe access between the two towns for youth, in particular, but also for mobility scooters, cyclists, runners and walkers, will be an incredible addition to our drive to be as strong and connected as we can be as a community," Walker said.
The path has been something former mayors, councillors and community groups have been lobbying for for many years.