A new location for the crossing at Dixons Long Point has been identified following the completion of engineering and geotechnical studies.
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The preferred plan would see a 110-metre-long, two-lane bridge constructed approximately 1.5 kilometres north of the existing Macquarie River crossing.
"The Dixons Long Point Crossing is a project 160 years in the making, so I am very proud to be able to say that it can now become a reality," federal MP Andrew Gee said.
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"The upgraded crossing will deliver a wide range of benefits to the Calare electorate and New South Wales by creating a crucial new link between the Mudgee, Cabonne and Orange areas, as well as the wider Central West, the Hunter and beyond."
The government recently kicked another $9.8 million into the project, meaning it had reached its target of $29.8 million and was now fully funded.
Public consultation on the design of the crossing is the next phase in the timeline.
The plans are expected to go on public exhibition with Mid-Western Regional Council next week, while residents affected by the project will be contacted directly.
"The benefits of completing this key transport artery for tourism, jobs and economic activity can not be underestimated," Mr Gee said.
"In terms of the visitor economy, the new crossing will create a unique regional tourist trail that can be started or finished in Lithgow, Bathurst, Mudgee, Wellington, Orange or Cabonne. The whole Central West region will benefit.
"After the economic impact of COVID-19, this capital injection in our local economy could not have come at a better time."
General manager of Mid-Western Regional Council, Brad Cam, said: "There is still work to do on the Mudgee side but it's a significant step towards opening up the Central West."
"The crossing at Dixons Long Point will improve access for communities throughout the region and provides a safer and more efficient route for road users," said general manager of Cabonne Shire Council Brad Byrnes.
"In addition, the upgrade opens up potential to link key food and wine regions in the area, benefiting the tourism markets and showcasing the produce of both Mudgee and Cabonne."
The project work is being commissioned by Mid-Western Regional Council in partnership with Cabonne Shire Council and is being administered through NSW RMS.
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