'Corridor B' - along the East West Rail route - was judged to offer greater benefits.
Jesse Norman, the Minister for Roads, says the preferred central corridor has been picked after considerable consultation and review.
He accepted the recommendations by Highways England and says building the new link close to the East/West rail link will also offer more options for the commercial development.
The Expressway, with options to pass either West or East of Oxford, is also expected to cut up to 40 minutes from journeys between the M4 and the M1.
Jesse Norman said: "The Government is taking the big decisions on infrastructure, working to maximise growth and productivity across the UK.
"England's Economic Heartland, as it has been called, already plays a crucial role in powering the UK's growth, science and innovation, but there is no single route to connect Oxford and Cambridge.
"This Expressway will enhance both transport connectivity and growth across the region for the benefit of the UK as a whole."
The choice of route means the Government has ruled out construction in the area of the Otmoor nature reserve.
It says the Expressway is on schedule to be open to traffic by 2030.
The Leader of Oxford City Council says the announcement does little to reduce uncertainty for people in Oxford and for people who travel here.
Councillor Susan Brown said: "The interface between the proposed Expressway and the new East-West Rail is also key. We welcome the commitment to plan for and invest in major infrastructure to support housing and economic growth in Oxfordshire, but we want to see the development of integrated transport systems and the prioritisation of clean, green and public transport.
"These principles need to be central in determining the final detailed route. We will now look closely at the proposals and will want to make sure there is a meaningful public consultation conducted by Highways England."
A spokesperson from Oxfordshire County Council said: "As a member of the Oxfordshire Growth Board, we strongly support better transport links and other infrastructure between Oxford and Cambridge in this strategically important corridor. However, we have set 3 tests to assess the decision-making process for that corridor and, eventually, the final route choice:
" Impact on the A34: it should provide relief to congestion on the A34 and function as a separate strategic route, allowing the A34 around Oxford to work better for local traffic
" Pressure on existing roads: It should not increase pressure on overstretched roads
" Conflation with other schemes: It should be developed separately but alongside other local schemes, to ensure the highway network works for Oxfordshire overall."
In the past, campaigners with the Expressway Action Group have highlighted the benefits of using and upgrading existing roads as part of the corridor, instead of building a new one.
Oxford Friends of the Earth, which has consistently opposed the idea, has condemned today's announcement.
Speaking for Oxford FoE, Chris Church said: "This is a dagger stabbing at the heart of Oxfordshire. There is no 'best' or 'least worst' route and there is no need for this road. The plan will not solve the transport problems facing Oxfordshire and will generate more journeys and more traffic congestion around employment centres such as Oxford.
He added: "A central reason for building the Expressway is to open up new land for housing along the route. Building homes for car-borne commuters in the countryside does nothing to meet Oxford's desperate need for affordable homes for local people. If we need new development across the county this should be planned locally and not dictated by the route of a new road.This plan cuts right across existing plans from our local councils on transport, air pollution and climate change. If those councils wish to retain any credibility on environmental issues then they should oppose this plan."
The campaign group said it is good news that that the government has ruled out construction in the area of the Otmoor nature reserve, though.
Keith Taylor, the Green MEP for Oxford, is angry about the announcement this morning and described the Oxford Expressway as 'a monumental disaster'
He said: "The Expressway itself is a wrongheaded and profoundly irresponsible pursuit that will put more cars on our roads, spewing out toxic fumes, and do so at the expensive of our precious environment. All at the cost of several billion pounds of taxpayers' money."
"That the corridor avoids the Otmoor is of little comfort when we know the project will still cause so much unnecessary destruction."
The Berks, Bucks and Oxon Wildlife Trust has described the chosen option as the 'worst of the three'
It says if the A34 is widened west of Oxford the increase in traffic and pollution could affect sensitive areas such as Oxford Meadows, Cothill Fen and Wytham Woods.
The process of designing a specific route will now get under way, and a full public consultation will be held next year.