The Department for Transport has approved the release of £11.8m for construction of the northern section of the Lyminster bypass.
The other £9.8m will come from West Sussex County Council, Coast to Capital Local Enterprise Partnership and private developer contributions.
The A284 Lyminster Road is an important north-south link road from the A27 at Crossbush, providing access to Littlehampton and to a lesser extent Bognor Regis. Journey times and accessibility are affected by the Wick level crossing, which causes delays to traffic in both directions and can impact on the junction with the A259.
The bypass is proposed to improve safety and accessibility as well as contributing to regeneration in the Littlehampton and Bognor Regis areas.
The planned scheme will link up with the southern section of the bypass, which Breheny Civil Engineering is currently building, to complete a new 1.1-mile single carriageway running to the east of Lyminster and Wick villages.
The road will link a new junction on the A259 in Littlehampton to the A284 just south of the A27 at Crossbush, easing congestion in and out of Littlehampton. It will also support plans for 1,260 new homes being built in the area.
The county council anticipates that construction will start in early 2022, subject to completion of the necessary land acquisition.