The third and final stage of the St George Hospital redevelopment will be fast-tracked as part of the state government's COVID-19 economic recovery plan.
A sum of $105 million has been allocated to start work on the $385 million Integrated Ambulatory Care Precinct and deliver it two year earlier than planned.
Premier Gladys Berejiklian said the project would be funded under the $3 billion Jobs and Infrastructure Acceleration Fund.
Ms Berejiklian said projects were being delivered in four separate fields: health, education, transport and roads.
Planning for St George Hospital Stage 3 will commence this year, with early works set to start in 2021. Main works are expected to start in early 2022, with completion in 2025.
The new facilities will be used mainly by outpatients, who visit the hospital for a wide range of procedures including blood transfusions, immune therapy, biopsies and treatment for incontinence.
Some of these services are provided at present from demountable buildings, which hospital staff call "tin sheds".
Former chair of the hospital's medical staff council, Associate Professor Theresa Jacques, who was one of the leaders of the campaign to rebuild St George Hospital, said she was "delighted this funding has been committed".
"It will be so good to see the last of the tin sheds and give the community another modern new precinct," she said.
Health Minister Brad Hazzard said the Integrated Ambulatory Care Precinct was the final stage of the $700 million redevelopment.
Mr Hazzard said the $105 million initial injection would boost local jobs and the economy.
Oatley MP Mark Coure said, "This is wonderful news, particularly for people with complex and chronic conditions, who will now spend less time in hospital, thanks to this new, first-class health facility."
Stage 2 of the St George redevelopment was completed six months ahead of schedule in October, 2017, with an eight-level Acute Services Building above the existing emergency department, and featuring additional inpatient beds, a new intensive care and high dependency unit, a cardiac catheterisation unit, a sterilising services department, new helipad and eight additional digital and interventional operating theatres.
Stage 1 delivered a $41 million new emergency department, together with an improved hydrotherapy pool.
