Council cabinet member Jon Andrews said the upgrade had been “long‑awaited”.
“The new route will link the town centre with key destinations in west Dorchester, including schools, the leisure centre and Poundbury,” he said.
“Without it, children cycling to school would have to use the main road, which carries high levels of traffic.
“Our officers recently visited Damers First School and heard first-hand from the Eco Club about the challenges of getting to school safely.
“The school has campaigned for this for years, so I’m delighted we’re delivering a safer route for children.”
The programme will complete improvement works on both ends of Williams Avenue, following previous upgrades at the Bridport Road junction.