The federal government has funded the bridge construction with $176.2 million while the NSW government foots the budget remainder.

Parkes MP Mark Coulton was joined by Dubbo MP Dugald Saunders and Dubbo Regional Council mayor Mathew Dickerson as well as Transport for NSW representatives to turn the first sod on Friday.

The project's first phase involves a realignment and reconstruction at the northern end of Darling Street, moving it to intersect with Brisbane Street instead of River Street.

"It's great to be here today to see work get underway, marking a significant milestone for this project," Mr Coulton said.

"The Dubbo community will reap the rewards during this construction phase which will deliver hundreds of local jobs and inject millions of dollars into the local economy."

The civil engineering company Abergeldie is constructing the intersection upgrade expected to take around five months to complete.

The new intersection is one of three early works packages to support the construction of the bridge.

Works include earthworks, construction of new road pavement, drainage works, minor adjustments to property fencing, and installation of signage and safety barriers.

Once complete, the new bridge will ease congestion and maintain reliable access through Dubbo during flood events.

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"We've seen how flooding impacts access across the Macquarie River, and this new bridge will be an important high-level route for when the Emile Serisier Bridge is submerged during a flood event," Mr Coulton said.

"This is about ensuring safe passage through Dubbo during future flood events and providing practical solutions to the problems caused by flooding in the past.

"The new bridge will not only keep local commuters moving during flood events, but it will improve the traffic flow on the Newell Highway in general, enhancing safety and reducing travel times for all road users.

"It will also be a key link in our regional road network and will improve freight efficiency and productivity."

The intersection upgrade is scheduled to be open to traffic early next year.

More details on the bridge construction on Newell Highway Upgrade - New Dubbo Bridge - Projects - Roads and Waterways - Transport for NSW.