The funding will allow the three local authorities to upgrade and improve their roads over the next 25 years.

Under the arrangements, Sheffield City Council will receive £663.8m in PFI credits, the Isle of Wight Council will receive £325m in PFI credits and the London Borough of Hounslow will receive £198m in PFI credits.

Councils will now draw up an Outline Business Case with work scheduled to start in 2011.