"Over the last few years we've seen strong growth in traffic volumes, with the number of vehicles on the road in 2016 increasing by over 6 per cent near Katikati and over 12 percent between Omokoroa and Tauranga.
"While further work will be required to determine the best route for a bypass and the timing for design and construction, it's clear that removing the state highway from the town centre will keep people safe, continue to improve reliability for locals and tourists and improve access to Katikati.
"As well as the safety work planned for between Omokoroa and Te Puna, we will also look to bring forward other improvements to support economic growth and development."
Ms McLean said the Transport Agency expected to be in a position to provide the community with more information on the timing, possible form and indicative cost of the bypass later this year.
"There's still a lot of work to be done and we'll keep the community fully informed as we progress," Ms McLean said.
Katikati Community Board chairwoman Jenny Hobbs was "doing a jig" she was so elated the bypass had finally been approved.
Mrs Hobbs had recently organised a petition for the bypass which gained nearly 4000 signatures online.
"It's really exciting and now I want to make sure it's not something that's going to happen five years down the track, it's got to be done soon," she said.
She said the excitement most of Katikati would be feeling would be tempered with some fear - plans for a bypass have been promised on and off for many decades.
"People will be wanting to trust and be joyful but we do need to ensure the planning for it and commitment dates of construction are sooner rather than later."
Western Bay deputy mayor and Katikati resident Mike Williams was "absolutely delighted" at the announcement.
Central government had tended to ignore the need for a bypass for many years he said, but the town had kept fighting.
He said without so much traffic and trucks roaring through the town centre the town would become a more attractive place.
"We can make it a destination rather than a pass through town," he said.
Katch Katikati's Jaqcui Knight said it was really exciting.
"You don't believe it until you see the first bit of dirt turned or the big machines roll in but I don't think they can say no now, the pressure is too high on our roads."
Public open days on the SH2 Waihi to Tauranga programme will be held later this month.
Transport Minister and Tauranga MP Simon Bridges said the bypass was a significant investment for the wider Bay of Plenty.
"I'm pleased that the particular concerns of the Katikati community are being taken on board ... [the NZTA] are committed to removing state highway traffic from the town centre to keep people safe and improve access to Katikati," he said.
"The investment being made through this programme will transform State Highway 2 between Tauranga and Waihi, including significant safety improvements which will reduce fatal and serious injury crashes on the route, while at the same time reducing congestion and supporting strong growth along the route.
"This will make a noticeable difference for motorists and ease freight movement," Mr Bridges said.
The Government's long term goal for the State Highway 2 corridor between Waihi and Tauranga is to reduce death and serious injury, support economic growth, and improve journey predictability.
