Deputy Prime Minister Michael McCormack and the member for Calare Andrew Gee were at the site where the road crosses the Macquarie River to announce the plan on Tuesday.

Mr McCormack, who is the Minister for Infrastructure, Transport and Regional Development, said it would link Mullion Creek to the end of Ullamalla Road.

The federal government allocated $16 million toward the work in this year's budget.

"[This investment] will deliver target upgrades along the vital tourist corridor, contributing to better safety and efficiency and boosting local industry," he said.

Roads and Maritime Services will administer the project in partnership with the two councils who each own the two roads that connect at the river crossing.

Mid-Western Regional Council will be the lead in the project and be supported by Cabonne Shire Council.

The federal government provided $100,000 for a feasibility study into the road upgrade in 2016.

It found $19.38 million was needed to provide a river crossing and upgrade part of the road.

Mr Gee said the road was currently unsealed with the river crossing only suited to 4WDs.

"The next stage of the project is the business case, which is expected to be completed in the coming months," he said.

He said once that was approved construction work could start before the end of the year.

"[It] will upgrade more than 30 kilometres of road to allow all vehicles to make use of this crucial regional link, bringing travel time savings and improved accessibility to healthcare services."

Mr Gee said the project could be undertaken without state government funding assistance.

It is expected the remaining funds would be provided by the federal government.

Receive our free newsletters delivered to your inbox, as well as breaking news alerts. Sign up below ...