The scheme will see Leicestershire County Council deliver improvements to the A6004 junction, completion of the inner relief road, and improvements to the town centre.
Local Transport Minister Norman Baker gave the final go-ahead, releasing £15m for the town centre project.
Baker said: “This important scheme will help to reduce traffic demand on the town centre road network and help regenerate the town encouraging economic growth and inward investment.
“It will improve public transport facilities and improve accessibility for pedestrians, cyclists and people with disabilities.
The project is being split into three main elements: A6004 junction improvements, the completion of the inner relief road and the improvements to the town centre. – the construction programme will continue until early 2015.