The NSW government has doubled its promised funding for the new Shellharbour Hospital on the state's south coast, chipping in an additional $320 million.
It will take the state's total contribution to $570 million, while the federal government has committed $128 million.
The funding injection is part of the $3 billion set aside as part of the NSW government's COVID-19 Recovery Plan to fast-track infrastructure and create jobs.
The hospital will relieve pressure on Wollongong and Shoalhaven hospitals, and provide 2800 jobs during construction, Premier Gladys Berejiklian says.
Kiama MP Gareth Ward says the the project will future proof the region's health services.
"This area is the second largest growth area in the state outside of southwestern Sydney," he told reporters on Tuesday.
"This announcement today is not just about building for 10 years time, it's about building for tomorrow."
The new hospital won't be built at the current Shellharbour Hospital site in Mount Warrigal but at an undeveloped site yet to be selected.
Health Minister Brad Hazzard said it was hoped the new hospital would open its doors to patients within five years.
"This will almost effectively double the capacity in most areas of the existing hospital," he said.
"It will have a new emergency department, new maternity (and) new mental health facilities."