Residents, motorists and cyclists have long complained about the junction between State Highway 6 and Tucker Beach Rd, by Quail Rise neighbourhood.
They must turn across the busy state highway from a stationary position to travel towards Queenstown.
The junction is at the bottom of a hill, next to the Shotover Bridge and river, facing two fast-flowing lanes of traffic.
NZ Transport Agency southern business unit manager Ian Duncan announced in May last year the agency was investigating creating a safe, separate access on to the Queenstown-bound lane using an existing underpass.
The aim was to bid for business-case funding and, if successful, tender for construction work by October.
However, more extensive modelling and assessment were required.
NZTA senior project manager Phil Dowsett said: ''The proposed local road connection from Quail Rise to Hawthorne Dr has been investigated and the implications of that are significant.
''The technical challenges around the gradient for trucks and the safe provision for cyclists warranted a more detailed investigation.''
A decision on construction funding is now expected next month.
If approved, work would be tendered soon after, with the aim of having the intersection upgrade completed by the end of this year.
Other essential work has been completed, including geotechnical investigations and concept design, while the detailed design and tender documentation was well advanced, Mr Dowsett said.
Some of Queenstown Lakes district's water and wastewater services for the further development of Quail Rise will be incorporated with the design. Approval has also been given to invest the remaining $1.4 million Otago regional transport funding in the project.
Queenstown Lakes Mayor Jim Boult has made several public comments about the need for the intersection upgrade to move forward.
He was, however, pleased to see work advancing.
''This is great news for residents of Quail Rise and Tucker Beach, who have long voiced their concerns about this intersection.
''Needless to say, I'm very happy our residents' concerns have been listened to.
''While I understand that the transport agency needs to confirm matters for their business case, I have every confidence this work will proceed.''
