The WA Government will go ahead with construction of the Pinjarra Heavy Haulage Deviation, after the Federal government announced on Thursday it was cutting funding from the project.
The project was part of a recent Federal government review of Australia's infrastructure pipeline.
The decision by the Federal government to withdraw its support will see $200 million cut from the project.
The State has already allocated $50m towards the project.
The Pinjarra Heavy Haulage Deviation will improve the efficiency of truck movements on the South Western Highway and improve safety in Pinjarra by diverting trucks around the township.
The project is currently going through environmental and heritage approvals.
Once these processes are completed, the State government will assess funding and delivery options.
"We see the Pinjarra Heavy Haulage Deviation as a very important project both for the efficiency of our supply chains and for the safety of people living in Pinjarra," said WA Transport Minister Rita Saffioti.
"This decision by the Federal Ggovernment to remove $200m from this project is disappointing but we remain committed to seeing it delivered, with $50m already allocated by the State.
"The project is currently going through environmental and heritage approvals, and once that process has concluded, we will assess funding and delivery options as part of regular budget processes."
Murray Wellington MLA Robyn Clarke said the project was 20 years in the making.
"Not only does this project complement the Shire of Murray's vision for our area, but it will also take heavy haulage away from our town centre and create a more vibrant community," Ms Clarke said.
