He made the announcement while visiting Oamaru today.
"Once finished, the 310km trail will be a major tourism asset for the Waitaki and Mackenzie Districts, helping attract both local and international visitors to the area,'' Mr Key says.
"There is strong support from local tourism operators, and a growing number of international tourists are already using the trail, with an estimated 25 percent more users in January 2015, compared with the same period last year.''
The Alps 2 Ocean cycle trail is one of 23 Great Rides that make up Nga Haerenga - the New Zealand Cycle Trail.
The additional funding brings the total Government contribution to the Alps 2 Ocean Cycle Trail to $3,705,000, and to almost $55 million to construct the trails nationally.
The local community has raised $955,000 of co-funding to contribute to the completion costs.
The 41km section to be completed will connect Sailors Cutting on the shores of Lake Benmore with Duntroon, meaning users will no longer have to cycle on State Highway 83.
