US lawmakers have voiced hopes that the ailing Everglades will start to recover after the Senate overwhelmingly approved a nearly $2bn measure to combat the toxic algae blooms that have devastated Florida’s waterways.

The Central Everglades Planning Project, touted by proponents as landmark legislation, passed the Senate on Thursday as part of a broader $10bn water resources bill by a vote of 95-3. The series of engineering projects are designed to collect water around Lake Okeechobee and channel it south to nourish the Everglades wetlands, America’s largest tropical wilderness, rather than have it run off into the ocean.

Housing and agricultural development has transformed the Everglades region and its natural water flow in recent years. Diverted water, often laced with nutrients from fertilizer, has recently caused toxic algal blooms in Florida waterways and beaches. The Everglades, deprived of this natural flow, is also threatened by sea level rise and invasive species.

Florida lawmakers who were instrumental in pushing for the Everglades restoration hailed Thursday’s development as a major obstacle overcome.

Map of Florida Everglades. Photograph: Central Everglades Planning Project

“This is a huge victory,” said Florida senator Bill Nelson, a Democrat. “This project will enable us to take a significant step forward in restoring the natural water flow to a water-starved Everglades national park.”

Marco Rubio, Florida’s other senator, said the project was “the single largest thing that’s gotten done” on the issue.

“It’s been tied up in this long-term morass, and it doesn’t solve every problem, but it’s the single biggest Everglades restoration project that Congress has finally made progress on,” the former Republican presidential candidate told the Guardian.

“You can start to see where we’ll be in a decade or less, and it’s a much better place than the Everglades and its surrounding communities are today.”

Nelson and Rubio were early co-sponsors of legislation to advance the Central Everglades Planning Project and have routinely emphasized the urgency of the issue. Rubio also persuaded Jim Inhofe, the chairman of the environment and public works committee that crafted the overall water bill, to back the project and reverse his longstanding opposition to Everglades restoration.

Inhofe, a Republican senator from Oklahoma who in 2000 was the lone senator to vote against Everglades funding, explained his change of heart in an op-ed for the Miami Herald that also cited the degradation caused by algae blooms.

More than half of the original Everglades has been destroyed to make way for industry and urban development. Thousands of acres of wetlands have been drained, with more than 1,400 miles of canals snaking through the area in order to divert water.

Some environmentalists have welcomed the plan as long overdue assistance for the Everglades. But others have criticized the planning project for not including any restoration of lost habitat.

“There will be more clean water for the Everglades but not nearly enough as most of it will still be discharged into the ocean,” said Matthew Schwartz, executive director of the South Florida Wildlands Association.

“With those billions of dollars they should be buying key pieces of agricultural land in order to bring back natural wetlands. That is what true Everglades restoration would be. Rather than just pushing dirt around we need the wetlands back to clean the water.

“We are turning one of the world’s great wetlands into a development. People come here to look at herons and manatees, not reservoirs and housing. You can’t do much once the land has become a Target shopping center, but agricultural land can be converted back.”

But Rubio said the sugar industry, as well as other smaller businesses, have been unfairly targeted by green activists.

“They want to turn these communities into ghost towns, and they want to take these people out of business, all for something that isn’t going to in the end solve the problem,” he said.

The House of Representatives is expected to take up its own version of the water bill, which similarly includes a $1.95bn authorization toward the Central Everglades, as early as next week. Bill Shuster, a Republican representative from Pennsylvania who chairs the relevant committee in the House, said he was optimistic Congress would send final legislation to Barack Obama’s desk by the end of the year.

Backers of the planning project acknowledged the work was only just beginning. But they praised this week’s step as the first major increment toward long-term restoration.

“I don’t think it’s an exaggeration to say that the Central Everglades Planning Project may be to date the single biggest step we have taken toward Everglades restoration,” said Shannon Estenoz, director of Everglades Restoration for the US Department of Interior.

At a time when Congress has become near synonymous with gridlock, Estenoz praised the rare show of bipartisanship that enabled Everglades supporters to cross this hurdle.

“The Florida delegation have been staunch supporters of the Everglades and so they get a lot of credit, particularly the south Florida delegation and both of our senators,” she said.

“This is the heart of restoring the River of Grass.”