The Federal government will allocate $461 million in their budget to build a new Bridgewater Bridge downriver from the current one in Hobart's north.

The Bridgewater Bridge is a critical part of the transport and freight link between the northern and southern regions of Tasmania, and is part of the National Land Transport Network. 

The current Bridgewater Bridge is reaching the end of its serviceable life and does not meet contemporary loading and design standards of the National Land Transport Network.

The pledge for a long-awaited replacement bridge linking the Brooker and Midland highways is part of a massive $920 million package for the state.

The minister for urban infrastructure and cities Paul Fletcher said a new bridge was an important infrastructure project for the state.

"Obviously it's an absolute vital connection just to the north of Hobart and critical if you're travelling on the Midland Highway between Hobart and Launceston," Brooker told ABC News.

"An upgrade of the Bridgewater Bridge has been talked about for a long time, the Turnbull government is now committing funding for that."

The Federal government will provide 80% of the funding for the project, with the state government expected to contribute the rest.

According to Fletcher, the funding would be rolled out over a number of years and key design features will be determined further down the track.

In response to the announcement, the state government upped its own pledge for the new bridge to $115 million - up from $46 million.

The new bridge will cater for pedestrians and cyclists, and construction is expected to create 200 jobs.

A business case has already been submitted to both Infrastructure Australia and the Department of Infrastructure, Regional Development and Cities for assessment.

Bridge works are expected to commence in 2020-21.