Each government has committed to provide A$225m ($145.2m) for the redevelopment project, in addition to the A$108m ($69.73m) invested by the Commonwealth and NSW governments.
The redevelopment project will include construction of a new Clinical Services Building at the current Albury site.
This new building will expand the range as well as complexity of services offered to the people living on the border.
It will offer critically important health care services, such as maternity services, paediatric services, and an intensive care unit.
The project site will also have a new helipad with direct access to the emergency department, intensive care unit, and neonatal care.
The redeveloped hospital will also include new operating theatres and the expansion of outpatient and specialist spaces for treatments such as dialysis.
It will also have a 32-bed mental health ward which will replace the Nolan House Mental Health Unit.
NSW Premier Dominic Perrottet said: “This $558m project will transform healthcare for people in the Albury-Wodonga region, ensuring world-class facilities are within reach to those living on either side of the border for generations to come.”
Construction work on the new hospital is anticipated to begin in 2024, with completion expected by 2027.
The redevelopment project is expected to create over 1,000 jobs.
Victorian Premier Daniel Andrews said: “As the border region continues to grow, we’ll make sure healthcare workers and local communities on both sides of the Murray can have the facilities they need.
“We’re working collaboratively with the NSW Government to give the growing Albury-Wodonga community the very best of care, now and into the future.”