The development will deliver better transport across the north east of Leeds to match the 5,000 new houses planned under the East Leeds Extension.
It will also include dedicated cycleways, pedestrian and equestrian pathways, as well as specially designed access points to improve access to surrounding areas.
The scheme's initial two phases will see improvements carried out to the Outer Ring Road Junction on the A61 corridor and at the
Roundhay Park Lane Junction. Design development will also be completed for the main ELOR route. Balfour Beatty will take on these works.
The third phase of works is expected to commence in late 2019.
The scheme will also see a significant investment in green-blue infrastructure which incorporates planting of trees and other plants as well as sustainable water management solutions along the route which will improve drainage, provide environmental benefits and add to the look and feel of the route.
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Leeds City Council have worked closely with West Yorkshire Combined Authority (WYCA) to arrange for funding from a range of sources to be in place, with Phases One and Two expected to cost around £16 million.
A ceremony was held at the former Red Hall nursery to celebrate the start of the development.
Councillor Richard Lewis, Leeds City Council executive member for Regeneration, Transport and Planning, said: "The East Leeds Orbital Route is the biggest infrastructure project undertaken by Leeds City Council for fifty years, since the completion of the Leeds Inner Ring Road.
"This scheme will ease congestion in existing residential areas across Cross Gates, Seacroft, Whitkirk and also play a key role in the growth plans for the city for years to come.
"We have listened carefully to the voices of local communities and stakeholders to make sure the plans for ELOR reflect the needs and aspirations of those who will be impacted by the development."
Councillor Kim Groves, Chair of West Yorkshire Combined Authority's transport committee, commented: "The East Leeds Orbital Route is an excellent example of the significant support the Combined Authority is providing to key City Region infrastructure projects through our West Yorkshire-plus Transport Fund.
"We have already approved over £145.23 million of investment through the Transport Fund on schemes designed to support inclusive growth, job creation and the construction of new homes."
Jonathan Taylor, Vice President of the European Investment Bank added: "New investment in sustainable local transport is crucial to reduce journey times, cut carbon emissions and benefit local communities. The European Investment Bank backs cutting-edge transport projects around the world and we are pleased to provide £100 million to improve and expand transport links across West Yorkshire in the coming years.
"The East Leeds Orbital Route will tackle traffic bottleneck around Leeds, improve local air quality and encourage biodiversity. This impressive scheme is a credit to West Yorkshire and provides a model for sustainable urban investment in forward thinking cities elsewhere."
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