Work is likely to begin early next year on a new cycle and footpath through old railway tunnels to the south of Bath.

Bath and North East Somerset Council has signalled its formal agreement to help with the funding of the Two Tunnels Project, which will link the city with Midford.

The decision by transport cabinet member Cllr Charles Gerrish ends the uncertainty for supporters of the project, which has secured £1 million of lottery funding.

Funding will also come from the auction of the King Bladud's Pigs which have brightened up city streets this summer.

Subject to seeing a satisfactory full business case and financial plan from scheme co-ordinator Sustrans and an annual review of B&NES's transport capital spending, the council has agreed to contribute £100,000 in each of the financial years 2008/09 and 2009/10. Similar amounts have also been earmarked over the following two.

A contractual agreement will now be put in place, and Sustrans, the Bristol-based sustainable transport charity which will be responsible for project management and the building of the path, intends to begin work early next year.

The four-mile "shared use" path will see the renovation of an old viaduct and the opening-up of the two tunnels, one of which is more than a mile long.

Supporters say the virtually flat route will become an attraction for both local people and tourists alike.

Frank Tompson, chair of the Two Tunnels Group which has worked with the council and Sustrans, said: "We have been waiting for this decision for some time now and wish to thank the council for becoming a full partner in the project. With the Two Tunnels Group, Sustrans and B&NES Council now working together, we can really get going on with a great project to serve the people of Bath and the surrounding area.

"We also wish to give a huge thank-you to everyone involved in the King Bladud Pigs project, volunteers, sponsors and buyers, for the fantastic financial contribution they have made to ensuring the path becomes a reality. The role they have played will become part of the heart and soul of the path that people will remember for years to come."

The lottery boost has come via Sustrans' national £50 million Connect2 package – voted for by the public in the UK's largest lottery competition last December.

More details are on the websites www.twotunnels.org.uk and www.sustransconnect2.org.uk.