Plans to build a replacement for Edinburgh's Sick Kids Hospital have been approved by the Scottish Government.
NHS Lothian's business case for a new Royal Hospital for Sick Children (RHSC) and Department of Clinical Neurosciences (DCN) has been accepted, Health Secretary Alex Neil said.
The hospital will be moving from Sciennes to Little France next to Edinburgh Royal Infirmary.
The new site's owners agreed to give the health board the land, currently a car park, in exchange for another site. The contract for its construction will be put out to tender this autumn and the new hospital is due to open in 2017.
Mr Neil said: "I am pleased to say that the outline business case for the new RHSC and DCN has been approved, meaning work to get the new hospital up and running for 2017 can move apace.
"There have been delays with the new Sick Kids Hospital in the past, due to land and commercial issues with an inherited PFI contract on the proposed site. I am pleased to say that there is now a framework in place to resolve the legal and commercial issues that arose in the original contract.
"This project is part of a £750 million health pipeline delivering a range of improvements to hospital and community health facilities right across Scotland. We have already seen £1 billion being pumped into our hospitals and health centres since 2011 and I can confirm that another £1 billion will be invested over the next two years. In 2013 alone we will invest nearly £500 million."
Charles Winstanley, chairman of NHS Lothian, said: "The benefits of having children's, maternity and adult services on the same site are well documented. This new building will add to the existing facilities at Little France to create a centre of excellence, bringing paediatric care, specialist neonatal care, neurosciences and A&E together."
Commenting on the announcement, Labour MSP Sarah Boyack said: "Parents across Scotland will be relieved to hear that progress is finally being made on delivering a new Sick Kids in Edinburgh.
"But no amount of spin can hide the fact that it will be delivered five years late and the current facilities were deemed not fit for purpose back in 2003. Staff, patients and parents will be disappointed at now having to cope for another four years with an unsuitable building, and it is only part of a crumbling NHS estate."
