Just days after the New South Wales government hailed the start of the Great Western Highway upgrade in 2023, works have ground to a halt. 

Planned upgrades to the major arterial road linking Sydney to Bathurst through the Blue Mountains were slated to be jointly funded by the Commonwealth and state governments in an 80/20 funding split. 

But last night's federal budget failed to mention the project.

NSW has so far committed $411.2 million, and had been waiting to hear whether Treasurer Jim Chalmers would allocate additional funding on top of the $2 billion already promised. 

"Of course it will have to come to some sort of halt," the NSW Regional Roads and Transport Minister Sam Farraway said. 

"We do not have the funding budgeted to proceed with the full construction and going to market and announcing tenderers. This is cut, cut, cut."

Early works scrapped

On Monday, the state government promised early works would begin in early 2023 with three contractors shortlisted to complete the eastern and western dual carriageways. 

The project also included a tunnel linking the two roads but funding for this section was separate.

"We have effectively started this project and now we are being told that the handbrake is being put on," Mr Farraway said. 

"Up until Tuesday night we had a national partnership agreement with the Commonwealth government of Australia to deliver the Great Western Highway project."

Mr Farraway said he has been told by the federal Minister for Infrastructure, Transport and Regional Development Catherine King that the project would be delayed for two years. 

In a statement, a spokeswoman for Ms King said the federal money already committed to the Great Western Highway remained in the budget.

"However, more work needs to be done to properly scope and plan the project as a whole, given there is currently no NSW funding committed to the central section of the project, without which it cannot reach its full potential," the spokeswoman said.

The central section of the works refers to an 11-kilometre long tunnel linking the two sections of dual carriageways.

"My agency, Transport for NSW, [is] meeting with the commonwealth agencies as of today. 

No surprises

The halt has been welcomed by some in the Lithgow district, which is at the western end of the project. 

"I would have thought that in the position that they hold, they would have known for some time that the federal government wasn't all that keen to provide the funding," Renzo Benedet from the Hartley District Progress Association said.

He said the delay could turn out to be an opportunity to consider other ways to reduce congestion, particularly around Blackheath.

"It gives time to think about the alternative," he said.

"If the view is that you want to punch a highway through the Blue Mountains, then is the Great Western Highway the best option?"