The announcement from the transport secretary, Grant Schapps, means work on the Stubbington bypass can soon begin.
The scheme will see a new 3.5km single carriageway built between Titchfield Road and Gosport Road, bypassing the B3334.
It will run south of Fareham and north and east of Stubbington.
Caroline Dinenage, the Conservative MP for Gosport, called the road a ‘critical part’ of the area’s traffic solutions.
‘I am delighted that this much-needed road improvement project will be delivered,' she said.
‘This new strategic route is essential to meet the needs of long-suffering residents and commuters, who put up with terrible congestion on a daily basis.
‘It will transform connectivity of the Solent Enterprise Zone and the wider Gosport peninsula, breaking down a key barrier to our area’s economic regeneration.’
New junctions will be built at both ends of the bypass and at Peak Lane, with improved infrastructure for pedestrians and cyclists.
Government set aside £19.7m for the road in 2016, which was spent on getting planning permission and improving roads in Fareham and Gosport.
It was a year later government said it would proffer the funding for the bypass’ construction, as then-communities secretary Sajid Javid announced millions in allocations to local enterprise partnerships across the country.
Hampshire County Council transport boss, councillor Rob Humby, said: ‘It is a relief we are now reaching the end of the process and this announcement means we can press ahead with delivering this long-awaited and very important scheme.
‘As soon as we have a funding agreement in place which releases the funds to us, we can set to work appointing a contractor and can confirm a start date for the construction to begin.’