The European Union is to give £14 million to fund a new cross-border bridge to be built at Narrow Water between County Louth and County Down.
The single lane cable bridge will be 660 metres long and could be open by 2015. Planning permission has been granted by authorities on both sides of the border.
A spokesman for Louth County Council confirmed: "The independent steering committee of the Special EU Programmes Body (SEUPB) has today approved funding of approximately 17.4 million euros from the INTERREG IVA programme for a bridge across the Newry River at Narrow Water between Omeath, Co Louth and Warrenpoint, Co Down.
"Given the amount of funding sought, project approval is also dependent on the financial support provided by the relevant accountable departments, which include the Department of Finance & Personnel in Northern Ireland and the Department of Transport, Tourism & Sport in Ireland."
The departments will be required to provide initial funding for the construction project and recoup the money from the European Union. It will be an opening bridge that allows tall ships, leisure craft and other marine vessels access to the Victoria Lock and the Albert Basin in Newry.
The bridge crosses the Newry River at Narrow Water to the Omeath Road at the townland of Cornamucklagh, near the village of Omeath.
The proposed development is by Louth County Council in association with Newry and Mourne District Council. Sinn Fein Northern Ireland assembly member Caitriona Ruane said it will transform the fortunes of South Down.
"This bridge has the potential to open up the entire South Down and Louth area for tourism and business," she said.
Finnan McCoy, chairman of Louth County Council, said: "Today's decision by the independent steering committee of the Special EU Programmes Body is perhaps the single most important milestone in terms of delivering this iconic bridge which will be a hugely positive 21st Century addition to this region.
"As well as all of its practical value, the Narrow Water Bridge will be a really powerful symbol of how far we have travelled in terms of community relations on this island."