The bridge across the River Newry at Narrow Water moved a step closer to reality today with the announcement that the EU's INTERREG programme has approved €17.4m for the project.
Last week, the local authorities on both sides of the border had granted planning permission for the project.
It was announced today that the Special EU Programmes Body had approved the funding for the bridge.
It will be located close to the spot where 18 British soldiers were killed in an IRA ambush at Warrenpoint in 1979.
A British tourist was killed in the Republic when the soldiers shot at him, thinking he was an IRA member.
The bridge at the Narrow Water had first been proposed back in the mid-1970s.
Additional funding will be required from both sides of the border, with the estimated total cost of the bridge around €18.3m.
Pending approval of the project, it is hoped that construction work will start next year with the bridge being opened in 2015.