NSW Minister for Roads Duncan Gay has announced the start of work on the $40 million Guanna Hill project that aims to improve road safety and reduce travel times for 3000 motorists and freight trucks using the section of highway daily.

Mr Gay said the Mitchell Highway was a vital freight corridor stretching from Bourke to Bathurst, and linked to major routes such as the Great Western and Newell highways.

"The highway is critical for the movement of thousands of head of livestock to one of the nation's largest saleyards, Dubbo Regional Livestock Markets, from farms located in and around areas such as Trangie, Narromine and Nevertire," he said.

"It is also a key project in delivering an upgraded Sydney to Dubbo corridor, which will better link the movement of goods from the east to supply towns, farms and local businesses in the west.

"The NSW Government is fast -racking this essential upgrade to deliver benefits to regional industries and communities sooner."

FK Gardner and Sons has been awarded the major work tender for the Guanna Hill project.

State Member for Orange Andrew Gee said the project would deliver a safer, wider, two-lane rural road with a 100 km/h speed limit and sealed road shoulders.

"The road has a high crash history, making this upgrade one of the most important projects across regional NSW right now," he said.