A United States budget cut has taken the Yukon Government by surprise.

Funding for the Shakwak Project has disappeared from the American government's annual budget.

Washington has provided more than $400 million over the past three decades for reconstruction of Canadian portions of the north Alaska Highway and the Haines Road. The US has been paying for the repairs because most of the highway traffic on those portions is American.

The funding is part of a longstanding agreement between Canada and the US that the highway will be improved to a paved stage.

Al Nixon, with the Yukon highways department, said there is still more than $100 million in work to be done. He said the biggest challenge is with permafrost changes on the most northern portions of the road.

Nixon said fixing the road is an important issue, both for Canada and Alaska.

"We've got very strong support from our colleagues from Alaska, and certainly from the trucking associations and several other interest groups that are supportive, so we're hopeful we can get the funding reinstated," he said.

Nixon said the Alaska government also feels strongly about the loss of the money, and both governments are working to have it restored.

He adds the territorial government has assured the Alaskans it won't abandon the highway.

Nixon said nothing will change in the short-term. He said the US government has funding banked which will allow construction work to proceed for three to four years.