Some £2 million of funding has been granted by the Department for Transport for the A46 Lincoln Road, Welton.
The funds will convert the T-junction to a roundabout to cater for extra traffic from proposed local housing developments.
The scheme aims to improve safety and reduce congestion at the current A46/Lincoln Road T-junction by constructing a new three-armed roundabout and realigning existing roads on the approaches.
As previously reported, these plans were backed by Gainsborough MP Sir Edward Leigh, who said the road layout is currently a safety concern.
Leader of Lincolnshire County Council, Martin Hill said: “Improving infrastructure for county residents is a key priority of my administration, so we can gain jobs and growth.
“We have already had success with improved rail services.
“So I am delighted with the announcement of an extra £2 million for a new roundabout on Lincoln Road which will ease congestion.
“It is what Lincolnshire deserves and my team and I will continue to push for extra central funding from government for more vital projects.”