A bypass around Marcham on the A415 -- which was first suggested in the 1930s -- is to be put back by at least two years.
Changes to the design of the road between Abingdon and Witney, and new Government environmental guidelines, are behind the delay.
Because the estimated cost has gone above £5m, the Government will pick up the bill instead of Oxfordshire County Council -- but councillors will have less influence on when the road will be built.
The route has been moved further south of the village in a bid to reduce noise.
To improve drivers' vision and safety, the original design of one long curve has been changed and planners have designed two straight stretches.
Other proposed changes include a pedestrian, cycle and cattle bridge, and a simple junction at Mill Road.
A roundabout is proposed at the western end, at Frilford Road.
County council principal projects manager, Julian Hartless, said: "We have completed the redesign work and now our consultants are drawing up a planning application.
"We have to examine the effects the road might have on the area, involving noise, water, flooding, animals, walkers, pedestrians and cyclists.
"It's important that when the application comes up for planning consideration we have a winner."
A planning application should be submitted early next year, and a public inquiry, if needed, would be held in November 2004.
Work would start in 2005 or 2006, for completion in 2007.
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