A £75 million funding package has been secured for the upgrade of the A5 project.
The A5 travels through L'Derry and Tyrone and passes through Strabane and Omagh before it meets the N2 across the border in the Republic of Ireland.
Sinn Féin MLA Declan McAleer the scheme has the potential to transform the economy of the north west of Ireland.
Mr McAleer said: "I welcome the fact that the Irish government have restated their support for the A5 project in this agreement.
"£75 million is now committed for this vital infrastructural project."
Work on the first section of the upgrade is to begin in 2017, as soon as the remaining planning issues have been resolved. It is expected to be complete in 2019.
Mr McAleer continued: "This will see the redevelopment of the road from Newbuildings to north of Strabane.
"Sinn Féin has committed that work will start as soon as possible and we are determined to see the second phase of the A5 upgrade from Omagh to Aughnacloy start at the same time in 2017."
(CD/LM)
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