The first stage of the Box Hill Hospital redevelopment will soon kick off, following the Government's decision to spend $38.2 million in this year's State Budget to begin works that will support the much-anticipated rebuilding project.

Premier Steve Bracks said the funds would be used to expand the size of the hospital site by purchasing new land on Spring Street and constructing a new clinical and office building.

The new building will contain:

•          A 16-chair renal dialysis service;

•          New facilities for outpatient services;

•          Permanent accommodation for Eastern Health administration;

•          A temporary lecture theatre and teaching and research facilities;

•          A new 634-space car park.

'This project has been identified as an essential first step in the major rebuilding of the Box Hill Hospital,' Mr Bracks said.

Construction of the Spring Street building is expected to start early next year and be completed by mid-2008.

'This is important and necessary work and will support future efforts to build a new, world-class hospital for the eastern suburbs.

Mr Bracks paid tribute to MP Bob Stensholt, who chairs the Box Hill project's Community Advisory Group.

Opened in 1956 with 28 midwifery beds, Box Hill has grown to become a 366-bed teaching hospital, with world-renowned services ranging from oncology, cardiac and cardiac investigation, emergency medicine, maternity and paediatrics to community and mental health services.

Servicing a population of more than 700,000, Box Hill last year admitted 45,000 people, saw 40,000 people in its emergency department and booked 44,000 outpatients appointments.

'We all know the medical services at Box Hill are excellent but the physical infrastructure is ageing.

'Today the Government has committed to addressing that by giving the green light to stage one of the redevelopment,' Mr Bracks said.