Transport secretary Patrick McLoughlin today confirmed that the government would provide £57 million towards the cost of the £92 million Bexhill-Hastings Link Road.
East Sussex County Council plans to build a 6km single carriageway road between the A259 in Bexhill and the B2092 Queensway in Hastings.
The scheme, which was given provisional funding approval in last year’s budget, also proposes three new junctions with bus priority measures and a "greenway" for cycling, walking and horse riding.
The council and the government claim the road would boost the economy of the area.
McLoughlin said: "This scheme will kick-start economic regeneration in a deprived area of the South East and tackle problems of accessibility between the towns of Bexhill and Hastings.
"It will open up 52,000 square metres of land in north-east Bexhill for business development and housing, creating new jobs.
"The £56.85 million we are putting into this scheme shows that the coalition government is serious about investing in the infrastructure the country needs to drive economic growth."
Planning permission for the road was granted in July 2009, but the county council has been waiting for government funding for the project before going ahead.
The news was greeted with dismay by objectors who say the link road, which is scheduled to be completed in 2015, would ruin a picturesque valley and threaten wildlife. A legal challenge by conservationists trying to halt the project failed in the High Court last October.
Sian Berry, the Campaign for Better Transport’s sustainable transport campaigner, said: "The decision to fund this damaging road is bad news for transport in Hastings and is an appalling use of public funds.
"The Bexhill-Hastings Link Road will destroy a vital area of open space for local people and wildlife in exchange for small time savings for a small number of drivers."
Berry said the area would benefit more from new housing and business developments close to the town centre and improvements in public transport.
Derrick Coffee, spokesman for local campaign group the Hastings Alliance, added: "We are hugely disappointed. The link road is little more than a speculative development promising environmental devastation on a grand scale."