The Department for Transport has announced that it will provide the remaining £27m needed for the Connecting Derby scheme.
It means work will begin in January on completing the missing section between Ford Street and Traffic Street.
Experts have welcomed the news, claiming the scheme will provide a springboard to future developments and boost the city's economy.
John Forkin, of Marketing Derby, said: "When people have visited Derby, they have complained about how lost they have got in the city centre and that puts people off.
"If we can fix that problem, it will make the city more attractive. The money will help protect the future of Derby by finishing a project that should have been done in the 1970s."
John Cadwallader, of Derby Cityscape, said the ring road completion would help to identify other areas that could be developed.
He added: "If you take a look at the route where the final part of the road will be, there are potential schemes that would come forward there."
David Walker, from East Midlands Centre for the Built Environment, which trains people in the region's highways construction industry, said Connecting Derby could be good news for workers.
He said: "Derby Cityscape has wonderful plans to revolutionise the built assets of Derby and, if Connecting Derby, opens up more projects for them, more jobs will be created."
The final part of the funding was announced yesterday.
The council will also provide £6.5m and money has come from developers who have to contribute to road improvements as part of their schemes, with the Westfield centre alone paying about £1m.
The new section of the ring road will cut through Abbey Street, Monk Street, Wilson Street, Forester Street and Talbot Street. It will feature cycle paths, footpaths and a link road in King Street.
Lucy Care, cabinet member for planning and transportation, said she was delighted the hurdle had been overcome.
She said: "I am relieved to get the money approved – it's taken a long time.
"It's going to be very different from that which we started in the 1970s – it's not flyovers dividing the city centre.
"It's going to be much friendlier for pedestrians, cyclists and buses. Some residential streets that carry traffic will become quiet cul-de-sacs."
It is hoped the final segment will be completed by December 2010.
A spokeswoman for the council said that, once construction started, the authority would do its best to minimise disruption to road users.
The plans to finish the ring road, which was started in the late 1960s, have been hit by a number of setbacks since they were announced in 2001.
One hurdle occurred in May when residents tried, ultimately unsuccessfully, to turn a stretch of land near Wilson Street into a village green.
In February 2007, an inquiry into the compulsory purchase orders needed for the scheme to go ahead was called.
Labour councillor Chris Williamson said: "It is essential for the future of the city to make it easier for people to move around Derby. "This is absolutely fantastic news and I am delighted."
Courtesy of Derby Evening Telegraph