The bypass, worth £109.2m, will see more than three miles of dual carriageway built to link Newton Abbott and Torbay and a flyover section at Penn Inn.
Transport secretary Justine Greening said: “The Department for Transport has invested over £76m in this scheme, which will cut congestion on Devon’s roads, as well as benefiting the environment and the local economy.
“The people of Kingskerswell will no longer have to put up with endless traffic jams, exhaust fumes and trucks thundering through the village and the road will really open up Torbay for tourism, creating jobs while providing a more pleasant drive for locals and visitors alike.”
Local authority estimates are that almost 8,000 jobs will be created across the area, with 3,600 of those in Torbay.
Research indicates that every £1 invested into the construction of the bypass will produce a £9 stimulus to the South Devon economy, providing a vital economic boost to the area.
Mayor of Torbay Gordon Oliver said: “We have lobbied for more years than I care to remember for this new road, which is vital to the local economy. The lack of a decent road into Torbay has severely hampered the Bay’s economic prospects.
“We know that inadequate road access into the Bay has made potential investors think very carefully in recent years about whether to come to the area so they, like us, will no doubt welcome this news.”
Chief Secretary to the Treasury, Danny Alexander, said: “The government is determined to make Britain’s infrastructure fit for the 21st century, helping to rebalance the economy and drive growth in all regions of the UK. I am delighted to approve this funding to deliver the Kingskerswell Bypass, which is critical to growth in the Newton Abbott and Torbay areas.”
The scheme was one of 21 given initial approval in the chancellor’s Autumn Statement last year.