Transport secretary Chris Grayling has approved £49.5m of government funding for the scheme. Leicestershire County Council, the project client, is providing £14m.
The 7km bypass around the east of the town will connect the A606 Nottingham Road to the A606 Burton Road, with roundabouts at Scalford Road, Melton Spinney Road, A607 Thorpe Road and B676 Saxby Road. There will also be bridges over the railway line and the River Eye.
Byron Rhodes, Leicestershire County Council’s deputy leader and long-time campaigner for the bypass, said: “It’s great news that the government is backing our plans to develop a relief road. We’ve already committed £4m in making this scheme shovel-ready with more funding to follow and I think this has been vital in securing the money.
“It’s an exciting scheme which is part of a strategy which includes further measures to address congestion issues, air pollution, public transport improvements, and provide healthy walking and cycling options. We will shortly be confirming details of our preferred route.”
The bypass will open up a number of potential development sites for housing and business. Around 4,500 homes and 6,000 jobs could be expected by 2036, it is suggested.