Chief Minister Andrew Barr has announced $38 million to reclaim 4.1 hectares of Lake Burley Griffin at West Basin.
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Mr Barr said the funding would begin in this year's budget, and the work would be done in 2018 and 2019.
The reclaimed area, which the government says brings the lake to the original planned shoreline, will include another 500 metres of boardwalk running along the outside of it and two jetties for boats.
The reclamation at its widest will be 80 metres. The whole length will have a 55-metre wide public promenade area, so the government says most of the reclaimed area will be public space.
Mr Barr also floated the idea of a government-funded ferry service from Kingston to the city, when population was big enough to justify it.
Mr Barr visited the first 150 metres of boardwalk on Tuesday. It includes a wooden walkway into the lake. Beside it, the government will now develop "Point Park", which tucks into a triangle of land beside Commonwealth Avenue and to the start of the bridge. Point Park, which includes a "great lawn" and a fitness area, is to be open to the public early in 2018. The first piece of boardwalk and Point Park is budgeted at $10 million.
The development of West Basin is vehemently opposed by groups who don't want to see apartment blocks and commercial development in the area.
Mr Barr said the government was pushing ahead with the plan, but the development blocks would not be sold until "the 2020s", beyond the next four years.
"The government, with our vision for this area, was returned [at the election] and we are now getting on with the job," he said.
The government was also to build a swimming pool at the head of the basin on the lake front in front of the Australian National University. That project is being reworked, after the government realised it would be too expensive and complex to build the proposed 50 metre pool with diving pool on the lakefront. Instead, it is looking to a smaller lakefront pool and another site for the big pool - although one option for siting the big pool at the ANU recently fell over.
The development of West Basin has been fraught to date, when the government ran into trouble trying to move the former bike and boat hire businesses from the area. It eventually bought the businesses out, but the deals were among those criticised by Auditor-General Maxine Cooper last year.
Attempts to bring people and activity to the lake with the Westside container village also hit trouble, with budget blowouts, few visitors and finally a decision by the National Capital Authority that it must be dismantled.
