The major engineering project will see a 130ft-wide tunnel excavated beneath the vital road link.
The excavation will allow a double track section of rail to pass under the A720, at a site just 200 metres east of Sheriffhall Roundabout.
Up to 50,000 motorists a day will be diverted along a like-for-like two-lane carriageway for the duration of the works. The road will skirt the closed section of the bypass to allow workmen to excavate the tunnel.
Preliminary work is due to begin this June while the temporary diversion route will come into effect from September.
The entire project is expected to be completed by May 2014.
Assurances have been given that traffic disruption will be kept to a minimum during the works.
Extensive traffic modelling has been carried out to ensure bypass traffic remains unaffected – and it is understood that as yet no speed restrictions are planned along the route.
Network Rail project director Hugh Wark said painstaking research has been done to make sure drivers are not affected by the work.
He said: “There will be a lot of interest in how we build the railway under the city bypass due to the heavy traffic which can already back up in that area.
“We believe that the plan, which has the full backing of Transport Scotland, provides a viable temporary solution which will prevent further traffic delays.”
The Borders Railway – running 35 miles between Edinburgh Waverley and Tweedbank – is set to be completed late next year, although the operation date has been set for summer 2015.
Mine remediation works began at the former Monktonhall Colliery in November last year – which involves a concrete-like solution being pumped back in to the mine shafts to stabilise the earth and future-proof the railway against any collapses.
Similar works will also soon get under way in Newtongrange and Gorebridge.
Rail consultant and author David Spaven said: “A job like this needs a lot of pre-planning and I’m confident that Network Rail will be able to pull it off.
“It’s a major project and although the shifting of the bypass to allow for the works may seem a big job, it’s not rocket science to be honest.
He added: “What this project does highlight, however, is the lack of foresight shown 25 years ago when the Cockburn Association called for such a reservation to be left beneath the bypass to allow for a railway to the Borders to be reopened. Now here we are spending several million pounds to do just that.”
Earlier this week we revealed how rail chiefs have received more than 2000 job applications from would-be train drivers – all competing for just 18 posts.
ScotRail, which advertised the trainee roles, was swamped with 2229 applications.