The Defra minister visited the Welshpool Wharf on the canal to meet those involved in the project to see the 35 mile canal reopened from Newtown via Welshpool and Llanymynech to connect with the Llangollen Canal between Oswestry and Ellesmere.
She took a trip on a specially adapted narrowboat, run by the Heulwen Trust, and learned how those behind the restoration believe it will bring £62 million of economic benefits over 10 years.
"The levelling-up grant will benefit the economy of the area," she said.
She praised Montgomeryshire MP, Craig Williams for working tirelessly in parliament to bring the funding to the area.
Christine Palin, chairman of the Friends of the Montgomery Canal, said the £16 million grant would be used to rebuilt two bridges and also create nature reserves, important to conserve the bio-diversity of the waterway.
"I have lived in the area all my life and remember when the bridges were taken down to to be able to see them restored is tremendous," she said.
"This takes nothing away from the incredible work of the volunteers that have worked tirelessly for many years, to restore the canal to what is is today."
Michael Limbrey, chairman of the Montgomery Waterway Restoration Trust, said that the visit by the minister would help put the canal and the restoration work on the national map.
"There will be more to do to bring boats back to Mid Wales.
"The levelling-up grant won't cover the Maerdy-Ardleen section nor the Vyrnwy Aqueduct and at Maerdy and Arddleen the two trunk road crossings are obviously a challenge."