Tunnelling has started at St Peters for the New M5 motorway which will extend to Beverly Hills.
Premier Mike Baird and Roads Minister Duncan Gay watched an excavator break ground for the nine kilometre twin tunnels.
This section of the $16.8 billion WestConnex tollroad is due to be completed in 2020.
Mr Baird said tunnelling was also under way on the M4 East and NorthConnex components of WestConnex.
“Along with our record investments in Sydney Metro rail and light rail, we’re picking up the pace as we rebuild NSW,” he said.
Mr Gay said, at present, the M5 motorway was congested for 13 hours a day, and the New M5 would cut the trip from Beverly Hills to St Peters to ten minutes.
Construction of the New M5 would generate more than 4400 full time jobs, including 155 apprentices.
Federal Minister for Urban Infrastructure Paul Fletcher said WestConnex would deliver more than $20 billion to the NSW economy and create 10,000 jobs.