A City of York Council report stated the project including dualling the road between the A19 and Little Hopgrove roundabout could still be achieved if its delivery is carefully phased.
The report added the phasing would focus on works to junctions along the ring road, with stages scheduled to support the building of new housing developments.
It comes as the scheme and the redevelopment of the area outside York Station face a combined shortfall of more than £128 million.
The ongoing Station Gateway scheme faces an £18.5 million funding shortfall, with the completion of the current tranche of works delayed by a year as of January, according to the report.
Council estimates put the cost of the Outer Ring Road scheme, which was approved last year, at £164 million compared to £51 million left in the budget for the project.
Officials warned earlier this year that the project may have be scaled back and some of the dualling omitted.
Neither of the projects will receive a share of the £15.6bn unveiled by Chancellor Rachel Reeves on Wednesday, June 4 for transport schemes across England.
A Government spokesperson previously told the Local Democracy Reporting Service (LDRS) they would continue to work with the council on its plans for the projects.
The Local Democracy Reporting Service (LDRS) understands further details on Government transport investment plans will be set out shortly, including in next week’s Spending Review.
Funding worth £25 million from the Government earmarked for the Outer Ring Road remains under review.
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York Council’s Labour administration has said difficult decisions will have to be made on both the Station Gateway and the Outer Ring Road amid spiralling costs.
Proposals set to go to the council’s executive for a decision in July include diverting £5 million from the Outer Ring Road to finish to Station Gateway.
York Station Gateway project CGIs. Credit City of York Council
It is believed that the funding for the Outer Ring Road could then be made up through contributions from forthcoming housing developments.
But the council’s opposition Liberal Democrat and Conservative groups said delays in starting works caused the shortfalls and there was no guarantee of recouping money for the Outer Ring Road.
The report outlining options for the schemes, which is set to be discussed by councillors on Monday, July 13 recommends seeing the Station Gateway project through to completion.
Plans for the scheme include improvements to bus and cycle infrastructure and upgrades to public spaces.
It would require confirmation that a promised £600,000 from York Station operator LNER for the fifth tranche of works still stands.
LNER did not respond to LDRS when asked whether they would stand by the funding pledge.
Council officials advised against stopping the project after the current tranche of works or limiting the scope of the scheme.
They have also recommended still going ahead with dualling the Outer Ring Road rather than stopping at improving existing roundabouts of shelving the project.
LDRS understands the council’s priority is to expand the Clifton Moor roundabout.
Works to those at Strensall, Haxby, Wigginton and Monks Cross would happen once funding becomes available.
It is estimated that the Outer Ring Road project would allow more than 3,557 homes to be built.
Current spending on the Outer Ring Road stands at £14 million.
The report stated: “The full delivery of the projects is vital for driving economic growth, attracting inward investment and the delivery of the agreed objectives of the council’s economic strategy.
“These projects enhance access to jobs, services, and regional transport links for our residents and businesses making York more competitive and resilient business location.
“Not progressing these schemes risks losing external funding, delaying housing delivery, and damaging relationships with key partners.”
