The part-time signals will be put in place at Sutton St Nicholas's new primary school, which is due to open later this year.
Councillor Brian Wilcox, Herefordshire Council's cabinet member for highways and transportation, said: "These part-time signals will only operate at school opening and closing times. Flashing lights will warn motorists they need to slow down but, outside of school times, the limit rises to 30mph and this will help to ensure traffic can keep flowing.
"We also want to encourage as many pupils as possible to walk and cycle to school and this 20mph limit will allow them to do this more safely," he added.
The part-time signals were chosen following consultation with the public, including an exhibition held last year.
Work began on Monday, February 18 to introduce both a new 30mph limit on the C1125 at Sutton St Nicholas and, within this, a part-time 20mph limit near to the school. The 20mph limit will only operate during term times at school opening and closing hours.
The scheme has been designed by Owen Williams on behalf of Herefordshire Council. It aims to reduce vehicle speeds and increase road safety for all road users especially children and encourage more pupils to walk and cycle to school.
Work includes a new pelican crossing near the school entrance, road signs including vehicle activated variable speed signs, improvements to footways, new road surfacing and road markings.
The council's contractor Amey Wye Valley is responsible for the work on site and completion is expected early in April. Every effort will be made to minimise disruption to road users.