Chancellor Rachel Reeves has promised the RAAC-hit West Suffolk Hospital will be amongst the first to be rebuilt in the budget announcement.
Speaking in the House of Commons she said £1 billion will be allocated to upgrading NHS buildings which are in "disrepair" - while £1.5 billion will go towards new hospital beds.
She said: "The Health Secretary will be announcing the details of his review into the New Hospital Programme in the coming weeks... and publishing in the new year... but I can tell the House today... that work will continue at pace to deliver those seven hospitals affected including West Suffolk Hospital in Bury St Edmunds and Leighton Hospital in Crewe."
Other hospitals amongst the seven that will be rebuilt first include the Queen Elizabeth Hospital in Kings Lynn and James Paget Hospital, Gorleston, near Great Yarmouth.
Bury St Edmunds and Stowmarket MP Peter Prinsley, who previously described the replacement of the hospital as a "real and present" problem that "cannot be put into the long grass", has praised the news.
An ear, nose and throat (ENT) surgeon at the Norfolk and Norwich Hospital and the James Paget Hospital, Gorleston, Dr Prinsley said: "It is quite brilliant to hear this project confirmed by the Chancellor, and also £500m for bio science research, the two main things I have asked for in the House of Commons since the election.
"It is a good day for Suffolk."
Diane Hind, mayor of Bury St Edmunds, said: "I am obviously absolutely delighted with the news - a new hospital is desperately needed as the fabric of the building is very poor.
"That said the hospital is really the care and service provided by dedicated doctors, nurses, and all the other services that provide care to us and our loved ones.
"A new building will enable excellent care to continue to be provided in a modern, safe, and clean environment.
"I must thank our MP Peter Prinsley for everything he has done in the last few months to champion West Suffolk Hospital to ensure that it would be prioritised for a rebuild," she added.
Leader of West Suffolk Council Cliff Waterman said: "Good news indeed about West Suffolk Hospital. Some of the credit must go to our new Labour MP, Peter Prinsley, who has made the case very effectively that it should be a priority."
Gary Norgate, programme director for the Future System programme at West Suffolk Hospital, said: “We are pleased the Chancellor has confirmed in today’s Budget that the project to deliver a new West Suffolk Hospital will continue at pace.
"As one of the seven RAAC hospitals, we wait with anticipation confirmation of our allocated capital budget.
"In the meantime, we continue to work closely with our community, colleagues and the national New Hospital Programme team to design and build a hospital fit for the future. We look forward to providing exciting news of progress."
The trust is on track to deliver a new healthcare facility on Hardwick Manor in 2030 and is currently working on the outline business case.
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