News that funding will be made available for the road was welcomed by MPs on both sides of the border, as well as local campaigners.
Mr Sunak revealed that the bypass on the A483 would be funded, following Prime Minister, Boris Johnson's commitment in the Welsh Conservative election manifesto.
Local people said they could hardly believe the news, which they said was fantastic.
Montgomeryshire politicians Craig Williams MP and Russell George AM said the announcement would sees the UK Government allocate £10million of funding into consultation for the long-awaited bypass.
Speaking in the House of Commons the Chancellor of the Exchequer stumbled on the pronunciation of Llanymynech.
But Mr Sunak said that the bypass would protect beautiful villages in the countryside.
The news provides a great boost to residents, businesses and tourists both sides of the border.
North Shropshire MP Owen Paterson said it was great news that the bypass campaign had paid off, while Mr Williams said: "This is a fantastic and historic moment for Montgomeryshire.
"The campaign for a bypass between Llanymynech and Pant has been ongoing for decades with very little progress until recently, and I pay tribute to groups such as the Llanymynech and Pant Bypass Action Group who have tirelessly campaigned for many years.
“I am extremely pleased that the Conservative UK Government is committed to improving infrastructure across Mid Wales, and I am very encouraged to hear the Chancellor talk specifically about improving the A483 – showing that the concerns and issues raised by Montgomeryshire residents are being listened to and tackled by the UK Government.
"Today’s announcement will provide not only a vast economic boost to businesses both sides of the border, but will also greatly improve the safety of road users and significantly reduce journey times, on what is currently a notorious stretch of road.
“It’s brilliant news for the people of Llanymynech, Pant and the surrounding areas, but also for Montgomeryshire as a whole.”
Russell George AM said: “The lack of progress on the scheme has for many years created significant concern for residents, prevented tourists from visiting and spending their money in Mid Wales, and has affected local Mid Wales businesses who rely on exporting their goods across the border.
“Many people live, work and access public services on different sides of the Wales-England Border but existing governance arrangements do not incentivise improving those links. This long-term solution which the Chancellor has paved the way for through this announcement will improve transport networks and boost economic growth and cross border cooperation between our communities."