Work has begun to prepare the Foxground and Berry bypass route for construction later this year.
Kiama MP Gareth Ward said the work included landscaping, earthworks and the demolition of some houses in the Toolijooa area.
Mr Ward said he was happy to see some work on the second stage of the Princes Highway upgrade begin.
"People told me it could never be done; that we'll never get there," Mr Ward said.
"Well, you can understand why, when I see some of those houses getting demolished and those earthworks getting ready that I'm very, very pleased I made the decision to stand for Parliament to get this done."
The government is due to announce the winning tender for construction by mid-year. The two finalists are Fulton Hogan and a consortium of Nace and Lend Lease Engineering.
"Fulton Hogan are the ones doing the $329-million extension at Gerringong," Mr Ward said.
"Nace are the ones who have just completed the South Nowra upgrade and Lend Lease Engineering are doing a whole bunch of works at Albatross at the moment."
The $510-million upgrade will bypass both the winding highway at Foxground and the town of Berry. Construction is scheduled to be completed in 2018.
A Roads and Maritime Services spokeswoman said stage-two works would overlap with stage one for roughly the first six months of 2015. However, substantial reductions in speed limits were not expected while stage-two works progressed.
"During this time, there will be minimal speed reductions on the Foxground and Berry bypass, with the exception of the new junction with Toolijooa Road, where a reduced speed limit will be needed to ensure safety while work is carried out," she said.