A £35m Regional Growth Fund grant will support a project to dredge a channel in the Mersey Estuary at Seaforth and allow access for large container ships to the new Liverpool2 deep water container terminal.
Awarded to the Mersey Docks & Harbour Company, the grant will support the creation of up to 5,000 new jobs while providing fresh opportunities for businesses dependent on the river.
News of the funding boost was provided by Chancellor George Osborne during a visit to the Port of Liverpool, where he met representatives from businesses in the region who stand to benefit from the dredging project, as well as apprentices who are training for jobs in the local maritime industry.
The grant will support Mersey Docks & Harbour Company's £40m plan to deepen the approach channel of the Mersey to 52ft.
Liverpool2 is being built to handle the larger ships using the enlarged Panama Canal and capable of carrying 13,500 containers.
The current limit in Liverpool is 3,500 containers.
Construction work has now started at the new terminal, which is expected to open in 2015.
Mark Whitworth, chief executive of Peel Ports Group, parent company of the Mersey Docks and Harbour Company, said: "This is exactly the kind of public sector investment the country needs because it will drive growth in the UK's private sector by improving infrastructure.
"The grant will critically support the region's maritime economy, and it will help Peel Ports expand the Port of Liverpool with our new £300m container terminal Liverpool2."
The chancellor said: "This project is good news for Merseyside and the North West, but also important to the UK as a whole.
"As well as creating 5,000 jobs, upgrading Merseyside's maritime infrastructure demonstrates that this country is open for business, and ready to compete in the global race."
Susan Williams, chief executive at Atlantic Gateway, said: "The maritime sector has always been central to the Liverpool City Region's economy and this award will further underpin the growth of hundreds of maritime businesses that use the Mersey in what is an increasingly competitive global market.
"The RGF grant will significantly boost international trade for the region and will drive jobs and growth. Investment in this kind of important infrastructure is crucial to developing international trade routes to the North of England."
Robert Hough, chairman of the Liverpool Local Enterprise Partnership, said: "This is a global opportunity that can transform our economy.
"This investment is a cornerstone of our collective ambition to maximise and accelerate economic growth across the City Region's port and logistics sector.
"Together with its partners, the LEP is focused on the development and implementation of the SuperPORT strategy.
"The start of this major project marks a new chapter in Liverpool's mercantile history."