A roundabout, connecting State Highway 84 with Sir Tim Wallis Dr, is being constructed by contractors for Three Parks developers Willowridge at a cost of between $3.5million and $4million.
As well, the NZ Transport Agency and Queenstown Lakes District Council will pay for the underpass on the far side of the roundabout from Wanaka.
Deputy mayor Calum MacLeod said having the underpass included in the project was the ''culmination of six years of pressure and pushing and conversation and cajoling''.
''It's bloody good news; it's really exciting; it's superb news.''
Mr MacLeod said the underpass would be of value to the new Te Kura O Take Karara primary school in Three Parks as many of the children who would attend were from Albert Town and they would not have to cross the highway to get to school.
''NZTA agreed to fund an underpass to the tune of a million bucks, which is their minor-improvement top mark,'' Mr MacLeod said.
The Queenstown Lakes District Council will contribute up to $500,000.
Three Parks developer Alan Dippie said it was in ''a really good handy spot'' and would be ideal for pedestrians and cyclists from Albert Town.
The roundabout and underpass would improve access not only to the school but also to the New World supermarket and Mitre 10 Mega, both under construction.
The road work will create some disruption over Christmas, but the contractors are required to keep the highway open.
The roundabout would be landscaped with 7000 native plants, Mr Dippie said.
''We've been keen to attach a high level of landscaping to it because it is the entrance to Wanaka.
''We're going to make a nice job of it.''
The underpass will be constructed once the roundabout is finished.
