A £445,000 cycle track is set to be built connecting Long Lawford with the town centre – meaning cyclists can avoid Lawford Road.
Work has already begun on a scheme linking the village to the Western Relief Road and now it is to benefit from £40m from the Department for Transport to make dangerous cycle routes and junctions safer.
Some £284,000 is coming from Warwickshire County Council, with the rest coming from the Government.
The route will run through land between New Bilton and Newbold on Avon.
A spokesman county council spokesman said: “We were already working on a cycle scheme linking Long Lawford to the Western Relief Road on the outskirts of Rugby, which is mainly funded by developer funding.
“Now that we have secured the additional funding from the government, we will be able to extend this cycle link to the town centre.
“The proposed cycle link will follow an alternative route to the north of Lawford Road within Rugby, enabling cyclists to avoid this busy main road.”
He added: “It is anticipated that the section between Long Lawford and the relief road will be completed over the summer. The extension to the town centre is likely to follow in early 2014.”
Transport charity Sustrans helped the Government choose various schemes to fund across the country. The popularity of cycling has risen nationally in the past year, following the success of the British Olympic team in the sport.