Nationalists last night welcomed the decision by the Republic's government to pledge up to £400 million of funds for the A5 road expansion.
Minister for Foreign Affairs Charlie Flanagan made the commitment as he outlined the Dublin administration's E27bn capital plan.
The Republic had originally pledged to pay almost half the original cost of the Derry-Aughnacloy upgrade but withdrew its funding offer in 2011. The dualling project stalled again in 2013 when the High Court ruled that the scheme needed a full environmental assessment.
Speaking in New York, where he was attending the United Nations General Assembly, Mr Flanagan said the investment plan covered a series of north-south projects that would benefit citizens throughout the island.
However, the minister warned that the cross-border investment was "predicated on a stable political environment" in the north.
"Extracting the maximum benefit from this very significant government expenditure will require a stable political environment in Northern Ireland and the full operation of all the institutions, including the cross-border bodies, established under the (Good Friday) Agreement," he said.
Mr Flanagan reiterated his determination to work with the Secretary of State Theresa Villiers and the Stormont parties to resolve the issues which threaten the stability of the devolved institutions.
"It is up to everyone to play their part in finding solutions to the current difficulties," he said.
"With a peaceful, politically stable Northern Ireland we can transform the economic and social landscape on this island."
The minister said funds would also be made available for the upgrade of the Dublin-Belfast rail line and in for tourism projects in the border region.
Sinn Féin MLA Declan McAleer welcomed the commitment from Dublin for what he described as a "key project".
"The upgrade of the A5 is crucial to the further development of the all-Ireland economy and would help communities all along the proposed route.
"We now need to see further progress on this project to ensure this commitment is delivered and this vital piece of infrastructure is put in place as soon as possible."
SDLP chairman Joe Byrne has welcome the news.
"Throughout the talks process, we have pressed the Irish government intensively on the need for firm commitments to North/South development in the Capital Investment Plan. I’m pleased to see a renewed focus on infrastructure development in the west but we must ensure that this is followed up with real investment to make the A5 a reality."
