The works between Hebden Bridge and Todmorden are due to start at the beginning of 2019.
A section of the Rochdale Canal towpath between Hebden Bridge and Todmorden is to benefit from a £1.5m scheme.
The money has come from the Department for Transport (DfT) and is to improve cycling and walking access.
The funding will be used to resurface and widen a 6km stretch of the Rochdale Canal towpath between Hebden Bridge and Todmorden, building on improvements currently underway on the 10km section between Hebden Bridge and Sowerby Bridge, and linking the two communities with a traffic free route for cycling and walking.
Cllr Eric Firth, Deputy Chairman of the West Yorkshire Combined Authority, said: "This is fantastic news for the region, particularly communities in Calderdale, who will benefit from a traffic free cycling and walking route through the valley.
"We've already seen the difference schemes of this kind can make. Since improvements to the Leeds Liverpool Canal towpath, delivered through our CityConnect programme, there has been a 70% increase in the number of people on the route, with up to 700 people using it on a daily basis.
"This is another example of how the Combined Authority, working with our partner councils, is exploring all possible funding sources to enable schemes such as this - which enable more people to travel in a way that benefits their health, the environment and the economy - to go ahead."
Cycling Minister Jesse Norman said: "I want us to become a nation of cyclists, and to make cycling the natural choice of transport for people of all ages and backgrounds. To support this goal, West Yorkshire Combined Authority will be creating a new 6km cycle route along the canal towpath between Hebden Bridge and Todmorden.
"While Britain has some of the safest roads in the world, we want to encourage still more people to take up cycling.
"We are determined to make cycling safer and easier across the country. This funding, as part of our overall cycling and walking strategy, will help local councils to make their roads safer for everyone."
The works between Hebden Bridge and Todmorden are due to start at the beginning of 2019 with the scheme completed by summer 2019.