A cross-border bridge linking County Down to County Louth is to be part-funded by cash from the Irish government's National Development Plan.
The bridge will aid the tourism industry
When completed the bridge would span Carlingford Lough near Narrow Water Castle.
The SDLP's PJ Bradley said he received assurances that the Irish government would contribute 14 million euros to the project.
However, Danny Kennedy of the UUP said the bridge was "unnecessary".
Mr Bradley, assembly member for the area, said he had been told by the Republic's Foreign Minister Dermot Ahern his government would contribute 14 million euros to the cost of the bridge.
"This announcement will help develop and expand the north-eastern economic corridor and give a new impetus to tourism in the area," he said.
The bridge will span Carlingford Lough near Narrow Water Castle
"It is the news that many people in the area have waited decades for. I hope that work on the bridge will begin as soon as possible."
However, UUP deputy leader Danny Kennedy said he believed building a bridge at the site was unnecessary.
"The real focus should be on creating a relief road closer to Newry," he said.
"This is a misty-eyed project that has no economic benefit for the Newry area."
Earlier this week, the Irish government announced it was to spend about £800m on Northern Ireland-related infrastructure projects over the next six years.
The money is part of the Irish goverment's £120bn National Development Plan to be implemented over the next six years.
Narrow Water Castle was the scene of an IRA ambush in 1979 when 18 soldiers were killed in two explosions.