Scotland's first "super campus" in Dumfries has secured £21.7m support from the Scottish Funding Council.
Dumfries and Galloway College should move by 2008
The cash will assist Dumfries and Galloway College's plans to move from Heathhall to the Crichton campus.
It will share the site with the University of Glasgow, University of Paisley and Bell College.
College principal Tony Jakimciw said it was a step towards the "utterly unique" project bringing higher and further education together on the same site.
Once complete, the new campus will be the first of its kind in Scotland.
"This announcement brings us another step nearer the finishing line," said Mr Jakimciw.
"This is a hugely significant achievement for Dumfries and Galloway College, epitomising the dynamism of Scotland's colleges."
He said the move would pioneer the opportunity for students to access cutting edge facilities across several education institutions.
"The new campus will be a 'one stop shop' and will allow our students to be the first in Scotland to benefit from this unique, highly progressive learning experience," he said.
In total the project will cost £32.8m and will incorporate purpose-designed facilities in a wide range of vocational areas.
The announcement was welcomed by Dumfries' Labour MSP Dr Elaine Murray.
"This is a tremendous boost for both Dumfries and Dumfries and Galloway," she said.
She added that the college already had a "superb reputation" and the announcement would consolidate the "trailblazing partnership" on the Crichton site.
The project is targeted for completion in time for the beginning of the academic year in August 2008.