The Birmingham Northern Relief Road (BNRR) will run for 27 miles and link the southern and northern ends of the M6. Its supporters say it will reduce congestion on the motorways around Birmingham, but environmentalists believe the BNRR will generate rather than reduce traffic.
The government subsidy for "the reconstruction of the existing M42 near Water Orton to enable its use by BNRR traffic" was revealed in a parliamentary answer by the transport minister Glenda Jackson to the Labour MP Tony Wright.
However, environmentalists claim that, while in opposition, Labour said the BNRR would not be built.
"The Government has misled people into believing this was an entirely privately funded project," said Gerald Kells, of Friends of the Earth. "Labour, who promised in opposition never to build the road, have this hidden subsidy."
Labour's own roads review document lists the BNRR as a "private" project, and the Highway Agency told a public inquiry that it fitted with Government policy of "harnessing private finance to bring forward badly needed infrastructure".
Ministers gave the go-ahead for the pounds 370m BNRR last July. Campaigners suspect that John Prescott, the Secretary of State for Transport, approved the road partly because of a penalty - said to be greater than pounds 30m - that was payable to the private consortium building the dual three-lane motorway if it was cancelled.
The details of the commercial agreement could be revealed if a judge allows the concession to be made public later this year.