Funding from the HSE Capital Plan is to be used to design the unit, which will be constructed on the grounds of Connolly Hospital.
Tánaiste Joan Burton welcomed the development and said it would benefit elderly residents from the community.
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She added: "This funding represents a strong vote of confidence in Connolly Hospital, which we have worked very hard to support in government.
"There was concern over the future of Woodlands and Silver Birch when the Health Information & Quality Authority announced that it would only register them as nursing units up to June 2015.
"However, the HSE is developing a plan to re-register the units with HIQA next year, and the plans for a new 100 bed unit provides long term security for all existing and future residents."
(CD/JP)
