Morgan Sindall will build a new section of railway track to take freight trains under the East Coast Main Line. The dive under will link the Stamford lines and the Great Northern Great Eastern lines at Werrington Junction.
The new two-track railway line will be just over 3km long.
Currently, slow moving freight trains need to cross over three lines of the East Coast Main Line, causing high speed passenger trains to slow down. Removing freight traffic should mean fast journey times for passengers.
The project is due on site this month, with the programme lasting until 2021.
The project, when combined with upgrades elsewhere along the route, will mean greater capacity for passenger services on the line, as they will no longer need to slow down on the approach to Werrington Junction, meaning it would be possible to run additional passenger services.
Network Rail submitted a Transport & Works Act Order (TWAO) in 2016 to begin work on the project. This has now been approved by the secretary of state for transport, Chris Grayling.
Network Rail route managing director Rob McIntosh said: “This is a significant investment into the railway in this area which, when coupled with other upgrades on this route, will have widespread benefits for those travelling between London and the north through an increased capacity of 33%.
“This vital upgrade will ensure we can provide an improved service for passengers and will create a more modern, reliable and resilient railway suitable to meet the needs of the communities and economies our railway serves.”