The council laid out a three-year timeline to defend itself from allegations it had held up the upgrade after the MP said a dispute over the road upgrade between levels of government has "gone on long enough".

Mr Anderson announced on Wednesday the state would take charge of the entire project through its subsidiary, Transport for NSW.

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"Transport for NSW, will now take over delivery of the project to ensure a smoother and safer road is finally delivered to the community," he said.

"The community and I are disappointed with the ongoing delays and the time taken to get this project shovel ready has meant the costs have increased."

Cr Chaffey said the effort to blame the council for the holdup was "unfair" and "unwarranted" and the MP had "never held up his end of the bargain".

"What's offensive to me is Mr Anderson's attempt to be blaming councils for the situation, where the road's not built," he said.

"When at no point, not one point has there ever been enough funding allocated to councils to deliver on the election promises and I take offence at some of the comments Mr Anderson's put forward ...

"It would have been irresponsible for us to do anything different than the actions that we have.

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"The reason I'm so disappointed and fired up about it is that the fingers are pointing at council when we have done absolutely everything to work with Transport for NSW and the local member to do everything we can to deliver this project."

The state government first budgeted to fund Tamworth and Gunnedah councils to build the project in 2020, but the ongoing saga over costs has seen the project continually delayed.

Initially the state committed to give the councils $9m for them to build the road, in July 2020 - but councils complained the project would cost an additional $3.9 million.

The state government committed more money in November 2020 and September 2021, but early tenders in early 2022 revealed the cost of the project had blown out. A second tender in May 2022 redefined the scope of the project, but budgets still didn't line up, Cr Chaffey said.

The June budget committed an extra $3.3 million, but councils demanded the state provide a $1.4 million contingency fund in case of cost blowouts.

Mr Chaffey said the fund was needed to prevent ratepayers paying for any part of the election commitment.

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Mr Anderson said on Wednesday morning that the government decided to take over the project after what he said was another delay as a result of the demand for the fund.

"The NSW Government is investing $15.6 million to the sealing of Rangari Road," Mr Anderson said.

"I have worked hard collaborating with Gunnedah and Tamworth councils to come up with a solution, but the community have had enough and demanded that the delays stop and work commence. It's time to get the job done.

"Transport have assured that the work will start in the coming months and once finished, I look forward to our community having a safer journey along this important road."

Minister for Regional Transport and Roads Sam Farraway said that although challenges such as drought, bushfires, COVID-19 and floods have impacted a number infrastructure projects across the state, Rangari Road had been delayed for too long.

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"The NSW Government is rolling out a record $19.4 billion infrastructure pipeline across regional NSW, we have faced set backs on many projects but this upgrade really does just need to get started," Mr Farraway said.

The upgrade will seal and widen about 20km of Rangari Road, from 3.8km east of the boundary between Gunnedah and Tamworth local government areas boundary to the boundary of Gunnedah and Narrabri local government areas, past Wean Road.

Tamworth Mayor Russell Webb welcomed the announcement that the state would take over the project, which he said would insulate the councils from any shortfalls in funding for the scheme.

"Both Tamworth Regional Council and Gunnedah Shire Council have been waiting a week to hear from the NSW Government about how it will move forward - now we have our answer," he said.

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