Blackpool Council has agreed a streetlighting PFI with the Community Lighting Partnership consortium worth £153m over 25 years.
The Community Lighting Partnership comprises Telereal Trillium and Pell Frischmann, who saw off competition from a rival bid led by Scottish and Southern Electric.
The Department for Transport has awarded £33.9m to fund the capital works and maintenance programme.
In addition, the council will spend £2.5m a year on the contract from its ongoing budget. It has also raised capital funding from Barclays and National Australia Bank.
Blackpool Council said the town was the first place in the world to install electric street lighting in 1879. The works will see changes made to nearly 430km of highway and replace over 80% of the town's street lighting.
Work started this week replacing 16,000 streetlights, 100 traffic signals and fitting new back-alley lighting.
Cllr Ian Fowler, cabinet member for business services, said: "We've been working on this project for many years so I'm delighted that Government has officially agreed our plans.
"Over time the current street lights will fail to comply with necessary standards and as a council we simply could not afford to replace them all ourselves. This PFI (Private Finance Initiative) allows us to have a state-of-the-art stock of lights that will save us money in energy costs without it impacting on council taxpayers.
"We know that many people are concerned about back alleys and fear that crime may take place there. This investment will fund more than 500 new lights to be installed in those locations.
"Lighting can make a huge difference to aesthetics of an area as can be seen on Devonshire Road and through the new Waterloo Road District Centre so I'm sure this work will also enhance the impression visitors receive."
It is expected that it will take two to three days per street to install the new lighting.
Quayle Munro advised the Community Lighting Partnership.