The Civic Cycle Loop will follow Marcus Clarke, Rudd, Bunda and Allara streets, connecting to the Sullivans Creek and Lake Burley Griffin cycle paths that feed into the city.

A special design competition is being held for the Bunda Street section of the route.

The ACT Greens have again suggested the busy thoroughfare should be changed to one-way traffic or made car-free during the day, except for taxis and disabled drivers or passengers.

The Civic Cycle Loop was identified as a priority project in 2009 with Territory and Municipal Services Minister Katy Gallagher announcing yesterday that work had started on the project.

''We know that in order to encourage more people onto bikes, safe infrastructure needs to be provided. This project will do that,'' she said.

The first stage of construction is on Rudd Street, connecting Marcus Clarke Street and Northbourne Avenue. It will provide 240m of 1.8m-wide on-road cycle lanes on either side of the street. Work on this section is due for completion in October.

Marcus Clarke Street will be the second section constructed, followed by Bunda and Allara streets. The entire project is due for completion in 2014.

Ms Gallagher said the most complicated section of the cycle loop was along Bunda Street between Mort and Akuna streets, due to the high pedestrian and traffic volumes and its popularity as a retail and hospitality strip.

''Three separate, highly qualified and experienced urban design consultants have been engaged to participate in a design competition for this section of the loop. Each consultant will put forward their best design for this space which will then be put to the community to comment on. This will be undertaken towards the end of 2012,'' she said.

ACT Greens territory and municipal services spokeswoman Caroline Le Couteur said the Greens were delighted work had started.

''I think the key word is 'finally'. This project has been around for a long time,'' she said.

However, Ms Le Couteur said the Greens did believe the $6 million project would be worth the wait - and the money.

''I'm constantly amazed by how expensive projects are. I think something that works well around the city is going to make a difference … I think it'll be really highly used,'' she said.

The Greens had previously suggested Bunda Street be made one-way or car-free during the day, although Ms Le Couteur said they were happy as long as pedestrians and cyclists were given priority in the design.

''The solution will end up restricting car use in that area but I don't think it will be a big loss,'' she said, adding the high volume of foot traffic across pedestrian crossings in Bunda Street already made it a difficult area for vehicles.

Pedal Power executive officer John Armstrong said the lobby group believed the government had been ''pretty consultative in this process'' and hoped the Marcus Clarke Street section would be completed before the end of the year because it would provide the critical link between the Sullivans Creek and Lake Burley Griffin paths.

''We have the opportunity to show the rest of Australia what we can do in providing quality cycling infrastructure for the next generation,'' Mr Armstrong said.

''Hopefully it will encourage a number of people out of their cars and on to their bikes.''

The Liberal's territory and municipal services spokesman Alistair Coe said the opposition supported ''better infrastructure for cyclists, but will keep a close eye on the Government's costings and ability to deliver''.