The Morrison Government, together with the NSW Government, has announced $40 million towards the planning and design of a bypass.

Federal Minister for Communications, Urban Infrastructure, Cities and the Arts Paul Fletcher, joined NSW Minister for Regional Transport and Roads Sam Farraway and Federal Liberal candidate for Gilmore Andrew Constance in Nowra for the announcement.

Minister Fletcher said the announcement highlighted the Morrison Government's commitment to delivering important infrastructure for the south coast.

"We are committing $32 million to progress work on a Nowra bypass, which will include the delivery of a strategic business case, environmental assessment and preliminary design work to inform any future investment decision," Mr Fletcher said.

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"These are the initial stages required to scope and plan for a project of this scale.

"The Princes Highway through Nowra has increasingly become a bottleneck both for freight and travellers passing through as well as locals trying to move safely through their own region.

"The need to assess a bypass of Nowra has become clear in order to support the growth of the Shoalhaven and increasing movements through the region along the Princes Highway corridor.

"This announcement is an important first step in the delivery of this project.

"This builds on more than $1.4 billion we have committed to major projects across the region as part of our record $120 billion 10-year infrastructure investment program, including $155 million for the Nowra bridge, $752 million for the Milton-Ulladulla Bypass, $500 million for upgrades to the Princes Highway between Jervis Bay Road and Sussex Inlet Road, as well as record funding for better and safer local roads.

"Infrastructure investment is central to the Morrison Government's economic plan and these investments are only possible because of our strong record of economic management."

Minister Farraway welcomed the investment from the Commonwealth which was "complemented by $8 million from the NSW Government to do the planning work and to be in a position to properly assess the benefits of a Nowra bypass."

The need for a bypass of Nowra has become clear in order to support the growth of the Shoalhaven and increasing movements through the region along the Princes Highway corridor.

"This planning and design work will complement the work we are already doing with Shoalhaven City Council to find ways to better improve traffic flow within the Nowra CBD."

Federal Liberal candidate for Gilmore, Andrew Constance, said the commitment was a big win for locals and a big step forward for the Nowra bypass project.

"For years the community have needed the bypass and I welcome today's announcement which will explore options to address a huge choke point in the Princes Highway," Mr Constance said.

"This means jobs and massive time savings for all.

"The project will be of similar size to the bypass of Coffs Harbour and doesn't require staging. This is only achievable because of the joint agreement between Federal and State."

State member for the South Coast Shelly Hancock said, "the Nowra bypass is important to the south coast in relieving traffic congestion and gridlock through Nowra."

"It's crucial that we get the planning underway to design and assess the Nowra bypass," she said.