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The partly sealed road, which links State Highway 6 near Wanaka Airport with Wanaka, has been the subject of discussion between residents, the Queenstown Lakes District Council (QLDC) and the NZ Transport Agency (NZTA).
QLDC general manager property and infrastructure Peter Hansby said yesterday the NZTA had agreed to fund half the project.
The road will be designed as a ``low-speed environment'' and provided with paint markings or planting and other "traffic-calming'' measures.
"We have worked very closely with [NZTA] and many people in the Wanaka community to agree a preferred design that strikes a balance between safety, community requirements, active travel and affordability,'' Mr Hansby said.
Construction is scheduled for the 2020-21 year.
Deputy mayor Calum Macleod described the announcement as "fantastic news''.
"The community has been pushing for an upgrade to the safe operation of this stretch of road for many years.''
Mount Barker Residents Association secretary Chrissie Thomson said the news was better than she expected.
"I think we can safely say the Mt Barker residents are delighted that there is some work to be started on Ballantyne Rd after 10 years of battling to have it made safer.''