The project is the biggest in NHS Orkney’s history and will replace Kirkwall’s Balfour Hospital as well as integrating other health care facilities.

The new building, which will be established in the outksirts of Kirkwall, will include the relocated Skerryvore and Heilendi GP practices, as well as King Street dental services.

Cathie Cowan, chief executive of NHS Orkney, said “This is a significant day for NHS Orkney. The investment by the Scottish Government further enables us to transform the care and services that we deliver.

“This new facility is a key part of our ambitious programme to transform care and services, which to date has seen investment in primary and community care, the establishment of a small high dependency unit, a consultant led staffing model and a CT scanner to support service repatriation.”

Cathie added “My staff are simply amazing, their camaraderie and can do attitude is hugely appreciated.”

The health board have previously awarded a contract for the delivery of the new build to Robertson Capital Projects, who will manage the design, construction and maintenance of the facility.

Keppie Design has been appointed as architects, while AECOM and TUV SUD make up the rest of the successful team.

Health secretary Shona Robison said: “I am delighted that the full business case for the new Hospital and Healthcare facility has been approved. This more than £60m project will provide a significant boost to the local economy during the construction phase, and once complete the hospital and healthcare facility will transform the way services are provided on the islands.

“These purpose-built, state-of-the-art facilities will enable more services to be provided at the hospital, ensuring some of our most remote communities don’t have to travel as far for routine care.”