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 car, going at 88mph, hit a pole causing a power cut and stopping the town clock, the spoof statement said.
The satire was among the first of what could end up being many tributes paid on Back to the Future Day.
Movie fans are celebrating 21 October 2015, the date Marty and Doc visited in the 1989 sci-fi time travel adventure sequel Back to the Future II.
The crash described in the police press release mirrors the key moment in the Back to the Future II plot, when Marty McFly, 17, and Doc go forward in time.
It said officers asked the 17-year-old driver what speed he had been doing, to which he replied, 88mph (142km/h) - the speed the pair's modified silver DeLorean had to hit to trigger the flux capacitor to send them back in time.
"A 17-year-old man was charged and was in possession of a licence which expired over 30 years ago," police said.
"Investigations into the vehicle and what a flux capacitor is, are ongoing."
It also posted an edited image of officers rushing to the scene on their hoverboards.
Mount Isa Cinema owner Jodi Saunders was quoted as saying the driver had asked when Jaws 19 - the film being screened at the Holomax cinema in the film - was showing.
Mount Isa Mayor Tony McGrady, meanwhile, was quoted as saying repairs were under way to save the clock tower, which in the famous scene is hit by lightning.
Queensland Police Media is famed for its light-hearted social media posts.
It has previously posted warnings on Facebook about wet roads from the tears of Top Gear fans after the show was cancelled, and has cautioned drivers not to "go ape" after a lorry carrying bananas crashed.

Mills, 28, and Clark, 36, hold a 20-point lead going into the finale, after finishing second and third in Tuesday's races.
The duo missed out on gold at London 2012, taking silver as New Zealand edged them out in the medal race.
"It feel like we've been sailing forever to get this gold," said Clark.
Find out about how to get into sailing with our special guide.
"It's completely surreal. We've sailed out of our skin in a marathon event."
The pair have dominated throughout the event, winning three races and finishing in the top eight in all 10.
However, a medal is now out of reach for male 470 pair Luke Patience and Chris Grube, who are sixth going in to the medal race.
Alain Sign and Dylan Fletcher stand a chance of claiming a medal in Thursday's 49er medal race, sitting fourth, but Charlotte Dobson and Sophie Ainsworth are seventh.
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The second section of the 16-mile (25.7km) Tywi Valley Path in Carmarthenshire has been given the go-ahead.
[NEXT_CONCEPT]
Police in Queensland say they have deployed their "hoverboard unit" after a silver car crashed near a cinema.
[NEXT_CONCEPT]
Great Britain's Hannah Mills and Saskia Clark will win Olympic gold in the women's 470 sailing if they finish Wednesday's medal race.