Minister for Transport and Roads Andrew Constance was in Wollongong on Monday ahead of Tuesday's budget to announce the NSW government was contributing $60 million to the project.

The federal government is chipping in with the remaining $240 million to allow Transport for NSW to build the interchange on the M1 Princes Motorway at the base of Mount Ousley.

Mr Constance said there would be close to $67 million in state money going to this "vitally important project".

"The project is one that is going to deal with one of the worst choke points on the Princes Motorway but also a place where it is dangerous both in terms of the interaction between trucks and cars," he said.

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"With this money we can get on with the necessary geotechnical work, utility and investigation and ultimately relocation, making sure that we do the necessary reference design work in light of what is being proposed.

"In terms of that proposal, it is about separating the trucks and the cars, there will obviously be a truck bypass lane, there's additional roundabouts, there's an additional exit point to assist entry to the university, Wollongong CBD and TAFE.

"In that regard this is going to be an important project for jobs, around 450 jobs will be created off the back of this project. This is going to be an important project for Wollongong and one in which we will ultimately see a great traffic outcome and one which improves safety dramatically."

The region's peak business advocacy organisation, Business Illawarra (BI) welcomed the project it said would "significantly improve the performance of the Princes Motorway (M1) at Mount Ousley".

BI said the gateway to the Illawarra and South Coast was beset by a number of issues as outlined by Business Illawarra's 2018 Illawarra First/NRMA research, which found that the road was carrying traffic volumes of 53,000 vehicles per day, of which 15 per cent were heavy vehicles, and would reach capacity by 2025.

Following evidence-based advocacy by Business Illawarra, together with its members NSW Ports and the University of Wollongong, an initial announcement of $21 million by the NSW government was made in November last year to progress design and planning works, which are now complete.

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BI"s Regional Advisory Council president Amy Harper said she was proud of the concerted advocacy that Business Illawarra had led for the project to proceed.

"So many businesses across our region will benefit from the enhancements to travel times, community safety and connectivity that the Mount Ousley Interchange project will deliver," Ms Harper said

"Illawarra First research found that the completed project will deliver $46 million in economic benefits on a road which carries a high proportion of heavy vehicles, growing traffic volumes and is rapidly reaching a critical choke point."

BI executive director Adam Zarth said that the further $39 million in funding in Tuesday's state budget would see the project ready to commence, which was timely given the growing demand on the road.

"Today's announcement of further funding is effectively the green light for this critical road project, and we are looking forward to seeing these figures in black and white in Tuesday's state budget," said Mr Zarth.

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