A route for buses and bicycles is to be built between Aberystwyth University and the National Library of Wales using regeneration money.
The circular route is expected to be 33m around (108ft) and will also link with a university sports centre.
The project will cost £242,750, but it has received a grant of £192,750 from the Aberystwyth regeneration fund.
The Welsh government named the town a regeneration area in October 2009 and it was awarded £10.3m in March 2010.
The money was available for three years.
It is designed to improve prosperity by regenerating housing and stimulating the local economy, employment and business growth, the Welsh government has said.
It added that a new piece of road would be built between the national library and a sports centre, where currently only a path exists.
Huw Lewis, the Minister for Regeneration, said: "Our regeneration programme is already making a difference to the social and physical environment in Aberystwyth.
"Our funding is helping improve the appearance of buildings in the town centre and in social housing."
FfotoAber was also awarded a grant of more than £3,800 to help put on a photo marathon and an exhibition in Aberystwyth.
Mr Lewis added: "With our support the town played host to a leg of the Halfords Tour Series and work is expected to start on site shortly with an Adizone and a multi-use games area at Min Y Ddôl.
"Funding these latest projects will help provide better transport links to the town's creative destinations and helping local people develop their skills and knowledge through the photography festival."