In all cases where State or through traffic upon a State highway runs through a municipality, the Department shall locate a route upon existing streets or upon a new street to be laid out through such municipality as a part of such State highway, so as to form a continuous route to serve the needs of through or State traffic upon such State highway. If a municipality is the terminus of such a highway, the Department shall extend the State highway to such point in the municipality upon existing streets or upon a new street to be laid out in such municipality, as will in the discretion of the Department best serve the needs of State or through traffic. For the purpose of locating or extending such State highway through or into such municipality the Department is authorized to lay out, establish, open, alter, widen, extend or relocate necessary streets therein.