The 7km section of track linking Wanaka to Glendhu Bay is to be built by the Queenstown Lakes District Council and Otago Regional Council.
The councils are responsible for two different sections of the track.
The QLDC has tendered for contractors to begin construction on a 4.7km track between Damper Bay and Glendhu Bay, at a cost of $400,000.
The regional council has budgeted about $150,000 for a 2.3km section from Ironside Hill - where the existing Wanaka Millennium Track ends - through to Damper Bay.
Once completed, the project will form part of the "length of the nation" Te Araroa Trail and also connect Wanaka to Arrowtown, via the Department of Conservation's Motatapu Track.
The Wanaka-Glendhu Bay link was promised about two years ago. But progress between the councils to advance the project to the construction stage has been slow.
The regional council threatened to shelve the project in February last year because it could not commit to funding construction to Glendhu Bay from Damper Bay. It was also concerned there was no commitment from the QLDC to maintain the track between Ironside and Damper Bay, once built.
The Wanaka Community Board recommended to the QLDC last month that the council should take responsibility for the 4.7km link between Damper and Glendhu Bays.
The project had stalled in the interim, although planning and scoping reports were prepared by respective council staff.
Regional council corporate services manager Wayne Scott confirmed the project was going ahead, when contacted by the Otago Daily Times.
"It's debatable whether [the project] has taken longer than it should have," he said.
QLDC chief executive Duncan Field said he had contacted the Dunedin-based Mr Scott to discuss the track.
"Now that we have been in contact we [the two councils] are very keen to co-operate to ensure the track goes ahead,"QLDC Wanaka project manager Mark Symons said the council was pushing on to develop its section linking Damper and Glendhu Bays.
Tenders for the track had been recently completed and a contractor secured, Mr Symons said.
The 4.7km link from Damper Bay to Glendhu Bay involves the use of explosives to blast the planned 1.2m-wide track into steep cliffs and bluffs on the proposed trail route.
The lakeside walking track will cut across part of Alphaburn Station, with the co-operation of landowners Don and Vicki McRae.
