The State Council has approved a feasibility study on a link between Pudong and Chongming Island via Changxing Island that aims to make it easier to travel from downtown Shanghai to Chongming.
With the study approved, work can now begin on the ambitious project.
The plan calls for the creation of the Shanghai-Chongming expressway, a 25.5-kilometer link that will include a 9-kilometer tunnel connecting Pudong and Changxing Island and a 10-kilometer bridge linking Changxing Island with Chongming Island.
Meanwhile, a 6.5-kilometer elevated highway will also be built on Changxing to connect the tunnel and bridge.
The expressway is designed for speeds of 80 to 100 kilometers an hour, according to the plan, which was released last year.
The whole project is expected to cost 12.2 billion yuan (US$1.47 billion) and be completed by 2007, officials said.
Located at the estuary of the Yangtze River, the 1,041-square kilometer Chongming Island is the third largest island in China.
The city government has begun to develop the island's tourism industry over the past couple of years and it is expected to see major development in the future.
Currently, Chongming is only linked to the downtown area by ferry service, with boats taking at least two hours to reach the island.
Once the bridge and tunnel are completed, the trip will take less than 30 minutes.