The Kariong to Somersby development is one of four projects in the nearly $400 million M1 Productivity Package.
Deputy Prime Minister and Minister for Infrastructure and Regional Development Warren Truss says the multi-million dollar project will reduce travel times between Newcastle and Sydney, improve road freight efficiency and provide for the anticipated growth of commuter and freight traffic.
The project will widen an eight-kilometre section of the M1 Pacific Motorway between the Somersby and Kariong interchanges from four to six lanes.
It also involves upgrading three of the four ramps at the Kariong interchange.
The Australian Government is providing $195.8 million and the New South Wales Government is providing $196.2 million to the M1 Productivity Package
The upgrade is expected to be completed in 2019.