The location remains controversial - with opposition groups insisting the facility should be located in Blanchardstown
The Cabinet has signed off on the construction of the new National Children's Hospital at a cost of €1.07bn.
BAM Ireland is expected to begin construction on the project on a site beside St James' Hospital site within weeks.
The price-tag – which has more than doubled since 2012 when it was expected to cost €404m – will place the facility among the world’s top 20 most expensive buildings.
The Government has claimed that the original estimate did not include the full costs involved.
Full planning permission was granted by An Bord Pleanála in April last year. Construction is expected to be completed by 2021.
The plan will combine Temple Street Hospital, Our Lady's Hospital in Crumlin and the National Children's Hospital in Tallaght on the one campus.
On his way into Cabinet this morning, the Health Minister Simon Harris refused to be drawn on the details of the cost - but insisted he will outline that it is value for money:
“I make absolutely no apology for making a very significant investment in the health care of children,” he said.
“Children account for about 25% of our population and I think that when people see the figures later, they will realise that the €650m cost that was envisaged previously related to a point in time; there are a number of significant additions that have been made.”
The location is still the subject of controversy, with the Connolly for Kids campaign insisting Connolly Hospital in Blanchardstown would be a better option.
“This is a hospital that has been discussed for years and years and has yet to be built,” said Minister Harris.
“There has been a debate over sites, over locations, planning issues this is a massive project which is going to be the largest investment we have ever made in the health and welfare of our children.
He said the “extraordinarily exciting” project will have huge economic benefits – bringing about 1700 construction jobs to Dublin.
In a statement, the Connolly for Kids Hospital group said the Government has made a "shameful decision".
The group argued: "Far from being the 'world-class' hospital claimed by government, it is actually unfit for purpose and a waste of public money because of many deficiencies.
"A truly world class hospital can be built at Connolly Hospital in Blanchardstown - faster and at a saving of at least €250 million of taxpayers' money. That hospital would also have the critical immediate maternity co-location (new Rotunda)."
The statement adds: "Connolly for Kids Hospital and the Jack and Jill Foundation have today sought legal opinion on options open to them to challenge the decision and have sent a ‘holding letter’ to the parties involved."
The National Paediatric Development Board (NPHDB) and the Children’s Hospital Group Board (CHGB) have welcomed the announcement.
The decision paves the way for the laying of foundations at the new children’s hospital project on a campus shared with St James’s Hospital and the new facilities at Connolly and Tallaght Hospitals.
The NPHDB has overseen a programme of work over the past three years which has seen the completion of a design for the children’s hospital and the two paediatric outpatients and urgent care centres.
A comprehensive tendering process was completed recently to select a construction company to complete the build of the hospital.
The 12-acre site on the St James’s Hospital campus has been fully cleared and is now ready for the laying of foundations of what will be one of the biggest buildings in Ireland.
The new hospital will be the size of Dundrum Shopping Centre and the length of Grafton Street.
It will include over 6,150 rooms, four acres of outdoor gardens and external space and 380 individual inpatient rooms each having their own en-suite and a bed for parents to sleep near their sick child.
Lorcan Birthistle, St James’s Hospital CEO, said the hospital board was 'delighted' with today's announcement.
He said: "We are looking forward to continued work with the Children’s Hospital Group and the NPHDB, and in time the Coombe Woman and Infants University Hospital, to ensure that our shared campus continues to further develop and provide world-class services that best meet the needs of Ireland’s sickest children, young people and adults as well as the local needs of the greater Dublin 8 area.”
Chairman of the New Crumlin Hospital Group, Louis Roden, said: “This is a great day, another critical milestone in helping us realise the vision and dream of ensuring that the sickest children of Ireland are treated in a modern world class facility, one that is fit for purpose.”
Professor Owen Smith, consultant paediatric haematologist at Our Lady’s Children’s Hospital, Crumlin added: “It is hard to put into words the positive impact that this new children’s hospital will have on the health outcomes and overall welfare of children and young people.
“My clinical colleagues across the three children’s hospitals and I, together with the Children’s Hospital Group team have spent many hours with the project and design team helping to inform the planning of the clinical spaces in what will be one of the finest hospitals in the world.”
And John Pollock, NPHDB project director, said: “Cost experts, Linesight have conducted international benchmarking exercises and they have demonstrated that the construction cost of the hospital compares favourably with hospitals recently built in the UK, the US and in the Middle East.
“Our core objective is to build and equip a modern, state of the art hospital that delivers value for the people of Ireland but which importantly is designed, built and equipped in a manner which will enable clinicians and staff, who have informed the design, to do their jobs to the best of their ability.”