The proposed walking and cycling path between Carmarthen and Llandeilo is expected to cost between £5m and £8m.
On Thursday, Carmarthenshire's planning committee approved the western phase between White Mill and Nantgaredig.
It is estimated the path could attract over 15,000 visitors a year, generating up to £2m in the local economy.
Work on the first section, between Fronun and Bwlch Bach, started in December 2016.
The council said negotiations with landowners were ongoing with the scheme being developed in phases.
The second section of the 16-mile (25.7km) Tywi Valley Path in Carmarthenshire has been given the go-ahead.