York Central, a Housing Zone and an Enterprise Zone, will include around 120,000 sq m of office space and up to 2,500 new homes.
Estimates suggest this could help to create up to 7,000 jobs in the city, and over £1.1bn value for the regional economy.
The jobs created would be high-value office based jobs, helping to grow York’s economy by an estimated 20% and would increase average wages in the city.
Cllr Chris Steward, leader of City of York Council, said: “This funding brings a significant boost to support work to ensure this vital scheme’s progress and success.
“It will provide capacity to undertake the huge amount of detailed work that needs to happen to ensure that we deliver York Central and the vital jobs and homes that this will bring.”
Enterprise Zone status means half of business rates generated from the site, which would have gone back to government, will be retained in the area for 25 years following completion.
Businesses moving to York Central will also get business rate relief for the first five years, providing an incentive for inward investment and business growth.