Work on a £12 million bypass in Enniskillen is to begin later this month.
The Cherrymount Link should be completed by spring 2013, Regional Development Minister Danny Kennedy said.
"This extremely worthwhile scheme has been long awaited by all road users in the Enniskillen area. On completion, the scheme will provide a new strategic link to the east of the town and will therefore help relieve traffic congestion in the town, reduce delays and driver frustration, and improve road safety," he said.
"Construction of the new link road is also timely in that it will also improve access to and from the new south west acute hospital in the town, currently under construction."
The two-kilometre route was initially expected to be completed by 2006, but has faced numerous setbacks.
The town has suffered from daily gridlock at peak times, exacerbated by an influx of southern shoppers from neighbouring border counties during times of favourable currency fluctuations.
A contract worth £5.4 million for construction of the new road has been awarded to a joint venture between PT McWilliams and McLaughlin & Harvey.
The £12.8 million scheme involves two kilometres of proposed new road, connecting the existing Cherrymount roundabout in the north of the town to Tempo Road on the south east of the town.
The first 600 metres leading from Cherrymount roundabout use the existing carriageway, with widening being carried out over this stretch. The remaining 1,400 metres provides a new link to Tempo Road adjacent to Burrendale with new roundabouts at its junction with Lawnakilla Way and Lower Chanterhill/Coa roads.
A roundabout along the route is being introduced to facilitate access to an area zoned for housing in the Fermanagh area plan.