Health Secretary Andrew Lansley confirmed £70m towards the redevelopment of West Cumberland Hospital near Whitehaven over the next three years.
The redevelopment plans went through a public consultation in 2007/08 and have been awaiting funding approval. Ground investigation works were carried out late last year by contractor Laing O'Rourke and consultant White Young Green and construction was due to begin in April 2010 if funding was approved before the election. Planning permission was granted at the end of April.
Lansley, who toured Cumbria's hospitals on Thursday, said in a statement: "I am pleased to announce the Department of Health's financial support for the rebuilding programme at West Cumberland Hospital. I have visited the hospital twice in the past. We appreciate how important their services are to the people of Cumbria. The need to maintain access to emergency care was reinforced by the tragic circumstances following the recent shootings.
"While other new hospital schemes are being considered in the context of the Spending Review, Cumberland will be treated on an exceptional basis, given its stage of development, evident priority and the relationship with local economic redevelopment through the energy coast programme.
"The Government remains committed to consider all future hospital projects in the context of the Spending Review to ensure value for money and affordability of these schemes. Only priority projects will receive Government support."
The North West Development Agency is contributing £10m to the redevelopment, the Strategic Health Authority another £10m, and the North Cumbria University Hospital Trust has also put in £10m.
Carole Heatly, chief executive of North Cumbria University Hospitals NHS Trust, said: "This is just fantastic news and I am absolutely thrilled we have been provided with the major part of our funding and the redevelopment of the West Cumberland Hospital can progress full steam ahead.
"This is the most significant investment into the healthcare of West Cumbria and I am overjoyed for the community of West Cumbria that they will now have brand new clinical facilities that will provide high-quality care for the future."
The new development includes plans for:
building a new modern A&E unit that accessible by helicopter and access to key departments such as critical care
a single operating theatre suite close to ward areas instead of theatres dispersed at various locations
increasing the proportion of single rooms to meet the 50% minimum single sex accommodation requirement
refurbishment of the women and children's unit
demolishing deficient buildings to make space for improved parking facilities