Work has begun on the latest stage of a new bypass around Oakham in Rutland.
The £11.6m project, which runs for three miles, is expected to improve safety for pedestrians and cyclists and improve the environment.
The work includes construction of a railway bridge that will avoid an accident black-spot level crossing.
The road, which is expected to relieve congestion through the town centre, will link the A6003 via Burley Park Way to the A606 north of Barleythorpe.
A substantial part of the bypass, from the A606 Stamford Road to Ashwell Road, has already been constructed and opened at the end of 2000.
The single-carriageway bypass extension is expected to take just over a year to build.
Residents living near the construction site will receive a monthly newsletter detailing the work.
Transport Minister Karen Buck said: "This government is committed to tackling congestion, improving environmental quality and increasing safety.
"The bypass will greatly help the town to retain its historic character.
"The scheme has been a key aspiration of the people of Rutland for a long time and I am delighted to be able to announce the go-ahead."