The NZ Transport Agency announced yesterday the final 5km section of the path, from St Leonards to Port Chalmers, would be funded.
Initially the project was expected to cost $6 million to $10million and be completed within three years.
But it was beset with delays after it became apparent the cost would be significantly more.
The total project, which also includes safety improvements on State Highway 88, is expected to cost $20million to $25million and will be funded by NZTA through the national land transport programme.
Most of the extra costs centre on the route through the steep Roseneath peninsula, where a raised path through the cutting above the road is suggested.
The proposed design also includes a boardwalk for cyclists and pedestrians around Blanket Bay and some reclamation of Mussel Bay to create space for the path between the highway and the rail line.
Options for making the State Highway 88/Finch St intersection safer and improving pedestrian access to the shared path will also be investigated.
Work on the project is to start this year and the aim is to open the path by 2022.
NZTA South Island director of regional relationships Jim Harland said detailed design and tender documents for the shared path would be completed in the coming months, and final consents lodged soon.
''Our team has been working through a host of design options to ensure we have a pathway that will help keep people safe, and will deliver the best outcomes for the city's transport network long-term around the harbour edge to Port Chalmers.''
West Harbour Community Board chairman Steve Walker said he was over the moon the St Leonards to Port Chalmers section of the path would finally be completed.
Local residents and the board had worked diligently and patiently with relevant agencies to get the project ''over the line''.
''I'm sure there will be a very loud and united celebratory scream of joy across the whole of the West Harbour and beyond. This news almost makes local politics worth it,'' he said.
Dunedin Mayor Dave Cull said the announcement was great news for the city and NZTA needed to be congratulated for committing to the project despite the increased costs.
There had been some understandable scepticism as the delays piled up. But NZTA had ultimately kept its promise, Mr Cull said.
People can view the final alignment of the shared path and provide feedback on the NZTA's website.
