Spokesman Dean Roberts said Main Roads was liaising with the City of Wanneroo to incorporate the project, which stalled last September, into its Mitchell Freeway extension project.
"The State Government provided funding several years ago for the City of Wanneroo to undertake the intersection improvements," he said.
"Unfortunately, delays were encountered in delivering the works.
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READ NOW"The opportunity is being taken for Main Roads to now deliver the works as part of the freeway project.
"This makes it more viable for the freeway contractor to transform the intersection into a four-way intersection with traffic lights."
Mr Roberts said the Neerabup Road extension from Connolly Drive would tie in with Wanneroo Road and the incomplete Flynn Drive realignment, and they would raise the road level slightly from the existing Wanneroo Road level.
"The site will be under traffic management control when work commences in October, 2015, and during construction," he said.
"Temporary lighting is to be considered as part of traffic and safety management of the site."
Mr Roberts said there would be no extra cost for Main Roads, with the final intersection layout included in the freeway contract with Leighton Contractors.
The City awarded the $3.462 million contract in February 2014 expecting works to finish last July, but instead there were delays and they stalled in September.
Acting infrastructure director Harminder Singh said the delays were due to the need to move power and communications infrastructure.
Mr Singh said if the City proceeded with the project now, Main Roads would have to rebuild the intersection less than six months after it had been finished.
"In the interest of ratepayers, City administration has made the decision to terminate works and let Main Roads WA continue with the Mitchell Freeway project which includes the (Neerabup Road/Wanneroo Road/Flynn Drive) intersection," he said.
"This would also benefit the road users as the inconvenience due to roadworks on Wanneroo Road would occur once.
"The City will undertake other outstanding works including power connection to street lights, verge restoration and fencing from Connolly Drive to Wanneroo Road."
At the May 26 council meeting, Wanneroo councillors endorsed a confidential report for the City's chief executive to resolve and settle the contractual matter with its contractor Brierty Limited.
It also asked staff to investigate any potential breaches of confidence or violations of the City's code of conduct relating to the report.
A story on Wanneroo MLA Paul Miles' call for Main Roads to take over the project in last week's Times prompted the speculation about breaches of confidence.
Agenda papers for the council's May 19 briefing session included a confidential report title "Construction of Flynn Drive update", which the City changed to "Resolution of contractual matter" on the May 26 council meeting agenda.