A new business case for the South Devon Link Road will be made by Devon County Council and Torbay Council.
The authorities are working on the submission, which will be considered by the Department for Transport in the new year.
The South Devon Link Road was one of many schemes around the country that have been put on hold by the Department, as they assess their priorities in the wake of the spending cuts.
The two councils have been meeting with local business leaders and politicians to outline the case for investment, and to discuss the boost to Torbay's economy which would result from an enhanced road around Kingskerswell, improved bus services and cycle provision.
Recent economic research has shown a saving to the community of £9 in benefits for every £1 that is spent on this transport improvement, helping to bring the region's economy back into line with other more prosperous areas.
The link road will not just benefit car drivers. It will offer improvements for other road users, enabling creation of a cycle route through Kingskerswell, making cycling safer and faster.
The removal of congestion through the village will cut bus journeys time and improve reliability; the Newton Abbot to Torbay service is one of the most heavily used in Devon.
Both of these measures will also help to reduce the carbon footprint of the road by making it easier to use other modes of transport and reduce reliance on cars.
As a result of easing the congestion, local residents will also benefit from significant improvements to air quality.
Road safety is another key feature of the proposals: the current road has an accident record that is twice the national average. The side roads are also subject to greater numbers of accidents as people seek to avoid the tailbacks by using them as 'rat- runs'.
Over the lifetime of the scheme, the new improvements should save over £60m by avoiding or reducing accidents.
Councillor Stuart Hughes, Devon County Council Cabinet Member for Highways and Transportation said:
"We are convinced that this scheme shows exceptional value for money. By helping the economy of Torbay, we can support Devon's economy too, creating more employment and improving access to education, training and prospects for growth.
"The project will enhance the entire region, bringing more visitors and making journey times shorter and more reliable for businesses and communities using the route.
"We welcome the prospect of making our case to the Minister and look forward to hearing his response. "
Elected Mayor of Torbay, Nick Bye, said:
"This scheme has been under consideration for many years, and we are committed to making it happen.
"We are keen to show the minister the benefits that this scheme could bring to Torbay.
"Our business community and local residents have been tremendous in expressing their support for the project, so we need to make sure that government is aware of the depth of support.
"It has the capacity to transform our economy dramatically and provide a wealth of opportunities for both existing and new businesses who might want to relocate here."
The proposals are being submitted before Christmas for consideration early in the New Year.
Mike Bomford - Devon Newscentre - Devon County Council - 01392 382173