The announcement, in the autumn statement, will bring life to a long-awaited project on derelict land in the Tipner area, according to Portsmouth City Council.
Builders will create a transport hub, homes, shops and offices homing in on a green space as part of plans to build a new junction off the M275 motorway.
The council's cabinet member for planning and regeneration Mike Hancock said: "We've worked for many years to achieve this and now we can turn the dream into a reality."
The authority has to find a further £10m for the Tipner scheme, said director of regeneration Kathy Wadsworth, who is to appoint contractors to start next year.
"The decision on the Tipner project is a green light to private-sector investors," she said. "Developers need to know there will be a proper road system in place."