Business leaders and politicians have hailed the government's award of �86.5m for Norwich's northern distributor road as a 'tremendous shot in the arm for the Norfolk economy'.

The long-awaited announcement by transport secretary Justine Greening paves the way for the controversial 14km dual carriageway which would link the A47 at Postwick to the A140 at Norwich airport.

Jubilant supporters of the NDR said the money would build a 'yellow brick road' which will unlock a �1.3bn boost to the local economy, encouraging job creation and business investment as part of a streamlined transport network.

Meanwhile, opponents called the road a 'permanent millstone' which would cost taxpayers dearly and open the way for 'excessive' growth plans, bringing more congestion to the north of the city.

The �86.5m announced today (14th) includes about �19m previously allocated for the critical junction improvements to the Postwick Hub, which could begin as soon as next year.

Norfolk County Council has agreed in principle to underwrite the remaining �25m shortfall in the total �111m project cost – regardless of whether levies on new housing developments generate enough revenue to subsidise it.

The authority's transport officials said they also remained committed to completing the NDR in future by extending it to the A1067 Fakenham Road, at an estimated extra cost approaching �20m.

But until then, opponents maintain the NDR as currently planned will be a 'road to nowhere' which will only serve the proposed urban expansion north of the city and increase rat-running problems to the west.

Among the politicians and business leaders who celebrated the funding award was county council leader Derrick Murphy, who said: 'This is great news and a tremendous shot in the arm for the Norfolk economy.

'People who have the long-term interests of Norfolk and its residents at heart will understand that the NDR is vital to the economic future of a wide area of north-east Norwich and north Norfolk.

'This is good news for jobs, for businesses and for people needing housing. It will also bring environmental improvements for many communities and the city centre by bringing relief from congestion and rat-running traffic.'

Andy Wood, chairman of the New Anglia Local Enterprise Partnership (LEP) said: 'This is a truly significant decision. We know that the road scheme will directly create thousands of new jobs and has the potential to transform the economic prospects of northern Norwich and significant parts of Norfolk. It is gratifying that the government has chosen to invest in a project which is so important to our area.'

Caroline Williams, chief executive of Norfolk Chamber of Commerce: 'The government has been asking what it can do to help businesses through the current challenging economic situation and has been told loud and clear that improved infrastructure is vital to support the growth agenda. This news is welcome and will enhance Norwich's future economy.'

Gary Howard, chairman of Norwich Chamber Council, said: 'To assist with delivering economic growth it is vital that we provide good reliable access for businesses, for them to be able to effectively and efficiently operate. The Northern Distributor road will vastly improve the existing and future businesses development, enabling them to flourish by avoiding the currently congested routes, resulting in increased supply of both goods and services.'

The allocation of NDR funding is conditional on progress being made on the sustainable transport plans laid out in the Norwich Area Transport Strategy (NATS).

The road project also underpins the urban expansion blueprints drawn up by the Greater Norwich Development Partnership (GNDP).

Andrew Proctor, chairman of the GNDP and leader of Broadland District Council said: 'The NDR may not be paved with gold, but it's certainly the Yellow Brick Road that many firms and individuals have been waiting for to ease traffic congestion, kick start the construction industry and provide a gateway to opportunity.'

Opponents of the NDR plans include Denise Carlo of the Norwich and Norfolk Transport Action Group (NNTAG), who said: 'The NDR will literally hang like a permanent millstone around the neck of Norwich. It will forever blight a large area of countryside, generate traffic and undermine efforts to encourage use of green transport.'

'We are disappointed about the funding for a NDR, but pleased that the government has at least reconfirmed the delivery of public transport, walking and cycling measures as a condition of funding for a half NDR. Green groups have pushed hard for such measures.'

Stephen Heard is chairman of the Stop Norwich Urbanisation (Snub) campaign group which is awaiting the outcome of its legal challenge to the GNDP's joint core strategy.

He said: 'We are intrigued about how this coalition government can be banging the localism drum but ignoring large volumes of public opinion at a local level who say this road is not going to ease traffic. The NDR would just recirculate existing traffic and, if all these new houses get built, it will create more congestion.'

Tim East, transport spokesman for the opposition Lib Dem group at the county council, said: 'We would advocate that the government looks to fund a full NDR, given the inherent diminished benefits anything short of that would provide.

'A full NDR would effectively act as a bypass for all the western parishes. Anything less will just lead to more rat running through Taverham, Costessey and the Marlpit areas.

'In this scenario, the west of the county will be excluded from reaping the rewards of an outer ring-road.'

Norwich North MP Chloe Smith, who campaigned for investment in the NDR, said: 'This is good news. I have long supported the proposed road scheme and spoke about it in my first speeches in parliament. I have most recently been pressing transport ministers to approve it. The campaigning has paid off.

'It will help businesses and support job creation. It also stands to free residents from congestion and improve the green travel choices available in the city centre.'