The NSW government says it will work with the federal government on building the Salt Ash bypass, but no clear timeline exists for when construction will start.
The federal budget on Tuesday included a $137.5 million allocation for the 11-kilometre duplication of Nelson Bay Road via farm land south of Salt Ash.
The project will link Williamtown with Bobs Farm and leave Williamtown to Fern Bay as the only single-lane stretch of Nelson Bay Road.
Minister for Regional Transport and Roads Jenny Aitchison said the Salt Ash bypass remained in the "early stages of development", but the NSW government had "confirmed the continuation of planning for the upgrade".
"Timing for delivery will be dependent on a number of factors, including determination of the review of environmental factors, technical investigations, land acquisition and the release of future funding," she said.
The former NSW Coalition government promised in 2015 that the entire road would be upgraded to dual carriageway, but the project has been slow to progress.
The Transport for NSW website says the government is "investing $275 million to improve safety and travel times on Nelson Bay Road".
It remains to be seen whether the Minns government includes funding for the project in next month's state budget.
Destination Port Stephens chair Sarah Smith said the federal funding "should go a long way towards making the state kick in" money for the work.
"Let's hope work starts sooner rather than later," she said.
"We've heard a lot from both sides [of politics]."
Port Stephens MP Kate Washington said the federal funding was "great news for the people of Port Stephens".
"The Minns Labor government will work in partnership with the Albanese Labor government to deliver this much-needed project," she said.
Transport for NSW selected a preferred route for the 11 kilometre road in 2021, and an initial 1 kilometre section of the project opened in August 2023.
