The Welsh Government has provided the £1.3bn Swansea Bay Tidal Lagoon scheme a boost by offering to invest up to £250m.
Swansea Council Leader Rob Stewart says the offer, which comes following months of behind the scenes discussions, is a significant breakthrough for the scheme.
Cllr Stewart believes that it is time for the UK Government to show its commitment to renewable energy and tidal power by approving the project as soon as possible.
Cllr Stewart said: "This welcome announcement from the First Minister shows that support for the Swansea Bay Tidal Lagoon in Wales is overwhelming.
“This will provide substantial investment to help construct the Swansea Bay Tidal Lagoon, which is potentially a game-changing moment for the project.
"Through this commitment, the First Minister has shown that the whole of Wales is behind this innovative, world first project, which sends another message to the UK Government to stop delaying and approve the scheme as soon as possible.
A figure between £100m and £250m has been pledged by the Welsh Government, according to Wales Online.
Political leaders in the city are hopeful that this investment will lower the subsidy burden on central government and help the project move forward.
Cllr Stewart continued: "It's time that the dithering in London stopped, with a green light needed right now for work to start on the project.
“It's unacceptable that there's still no decision from the UK Government, despite a year having passed since Charles Hendry, the UK Government's own independent inspector, concluded in a review that tidal lagoon power is a no-regrets option.
“This is why I'm again calling on the Prime Minister to show leadership and act now for the benefit of Swansea and Wales.
"The tidal lagoon would create thousands of high-quality jobs and generate zero carbon power for over a century for about 155,000 homes, while also leading to a global export market in Swansea because of the specialist turbines and other component parts that would be made here for other lagoons across the UK and beyond."
Cllr Stewart travelled to London in late November to hand-deliver a letter of Swansea Bay Tidal Lagoon support to 10 Downing Street, which was signed by over 100 of South Wales's largest businesses.
A digital 'Love the Lagoon' campaign was also launched on social media which has seen hundreds of residents, businesspeople and celebrities backing the project.
These include Welsh rugby stars Alun-Wyn Jones, Ryan Jones, Shane Williams, Leigh Halfpenny and Jonathan Davies, singer Bonnie Tyler, Gavin and Stacey actress Melanie Walters, and Nigel Short, Penderyn single malt Welsh whisky owner and Chairman of Scarlets Rugby.
Cllr Stewart added: "The volume of support for the Swansea Bay Tidal Lagoon is staggering. With the project due to act as a pathfinder for other, larger scale lagoons across the country, approval would also be of huge benefit to the UK as a whole.
"Post-Brexit, this is exactly the type of scheme the UK Government should be committing to because it would lead to lucrative trading opportunities across the world."