The Abbott government will commit more than a billion dollars to fund the second stage of the East West Link road under a deal hammered out with the Napthine government.

Fairfax Media has learned the federal and state governments have finally reached agreement on Canberra’s contribution to the road in recent days.

The agreement is expected to be formally announced later this week, just days before the Victorian and federal budgets are handed down.

Canberra's contribution of just over $1 billion is designed to bring forward the second stage of the project, which connects the Tullamarine Freeway to the Western Ring Road, and could see preliminary work begin as soon as next year.