After more than two decades of campaigning, and at the cost of scores of road fatalities, the first sod was turned on the highly-anticipated $820 million Oxley Highway to Kundabung upgrade on Wednesday.

Deputy Prime Minister, and Minister for Infrastructure and Regional Development, Warren Truss said the 23 kilometres of new works on the accident-prone section of the Pacific Highway would be complete by the end of 2017.

In addition to cutting travel times and making the highway safer for motorists, Mr Truss said the upgrade would "deliver the quality of highway the people of the area expect and have looked forward to for so long".

It will also cement the highway's future as the east coast's main freight artery, create more than 990 direct jobs during construction and have ongoing spin-offs for tourism, trade and the local economy in general.

"This project will continue to help reduce fatal crashes on the Pacific Highway, which have almost halved since we first started works in 1996 - despite an increase in traffic volumes," Mr Truss said.

"While there's still a lot of work to be done, the start of works here today puts us on track to finish upgrading the Pacific Highway on schedule by the end of the decade."

Both governments continue to work as partners on the Pacific Highway, with the federal government contributing $542.4 million towards the Oxley Highway to Kundabung project, and the state government committing the remaining $277.6 million.

Member for Port Macquarie Leslie Williams said the new works included good connections for local traffic entering and exiting the highway, with new interchanges to be built at Blackmans Point Road, Haydons Wharf Road and Yarrabee Road, complementing the Sancrox interchange which is currently underway.

"Work on the adjoining 14 kilometre Kundabung to Kempsey project is expected to start in the coming months, as well as the 20 kilometre section between Warrell Creek and Nambucca Heads," she said.

Member for Lyne, Dr Gillespie said Lend Lease was designing and building the 23 kilometre section, leaving sufficient space to upgrade the road to six lanes in the future.