The radiotherapy unit at Altnagelvin Hospital in Derry, which will cater for cancer patients from Donegal, will be built by 2016.
The news follows the decision by North Ireland Health Minister Edwin Poots to give the green light to the project.
He admitted that the personal stories of many cancer patients had helped him make up his mind that the unit was vital.
Plans for the unit had previously been put on ice because of the cost.
Donegal cancer campaigner Noelle Duddy of Cancer Care North West said she is simply lost for words on what is a very emotional and important day for the people of Donegal.
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