Traffic lights will be installed at the Coranderrk Street roundabout on Parkes Way, directing vehicles turning right towards the city or Parliamentary Triangle.
The lights - expected to be built in the first half of 2022 - will help traffic flow during Woden light rail construction, ACT Transport Minister Chris Steel said.
"One of the actions we are proposing to the Commonwealth is to upgrade a well-known bottleneck in our road network; the Coranderrk Street roundabout on Parkes Way," Mr Steel said.
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"This roundabout currently has a dominant west-bound flow of traffic in the morning, causing major congestion for east-bound traffic coming into the city and the Parliamentary Triangle from areas like Belconnen and Tuggeranong."
Traffic will increase significantly on Parkes Way during the construction of the light rail, the minister said.
This is because lane closures and works on Commonwealth Avenue will see traffic diverted via routes including Kings Avenue, Tuggeranong Parkway and Monaro Highway.
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The ACT government believes 20 per cent more cars will be able to exit Parkes Way onto Coranderrk Street when the lights are installed.
They said this would mean approximately 250 more east-bound vehicles on the roundabout during peak hour traffic each morning.
"Works will be timed for completion in parallel with the start of major works to raise London Circuit," the ACT government said.
"As part of the broader light rail works the ACT government is also planning to temporarily signalise the northern side of Vernon Circle to allow safe right-turn movements onto Constitution Avenue and London Circuit for buses and other vehicles heading northbound."
