Physical work is set to get underway before the end of 2017 on the two-stage, two-lane, 1.6 kilometre extension, which will form the long-anticipated link between Wheelers Lane and Sheraton Road.

NSW Planning Minister Anthony Roberts joined Dubbo MP Troy Grant and Dubbo Regional Council (DRC) administrator Michael Kneipp and director technical services Ian Bailey to announce the funding.

The council will contribute $2 million to the project, which is expected to cost more than $8 million. Alkane Resources will also pitch in as part of its $2.3 million voluntary planning agreement with council.

Mr Roberts said the “historic” investment would enable 2800 more homes to be built in the Keswick and South Lakes areas.

Mr Kneipp said it would bring the Boundary Road extension forward by up to three years.

“I think everyone here is aware as to how critical the Sheraton Road crossing with the highway is and how congested it gets, particularly around school times and so by putting Boundary Road through here that’s going to take a huge amount of congestion off the main highway,” said Mr Kneipp, DRC administrator.

“We’re very grateful … that we’ve got a government with money to spend and particularly spending it in regional areas.”

The first stage of the project, between Wheelers Lane and Alexandrina Avenue, will include a fully kerbed road with footpath, cycle lanes and storm water drainage, with roundabouts at either end. It is set to be completed by the end of 2018.

The second stage will run from Alexandrina Avenue to Sheraton Road with street lighting along the length of the road, and be completed by 2020.

“Wherever there’s going to be population growth you need to make the necessary investments in all the key infrastructure, whether it be schools, whether it be police stations, emergency services, health facilities and all of those things need to come into the mix,” Mr Grant said.

“Dubbo is steaming ahead – it’s going gangbusters,” Mr Roberts said.

“This won’t be the last bit of funding … with respect to accelerating housing in Dubbo [and] I’m committed to … ensuring Dubbo gets the very best opportunities that it can from this state government. There’s great opportunities in rural and regional NSW to develop strong, robust and vibrant communities.”