St James’s Hospital in south Dublin has been announced as the location for the new National Children’s Hospital.

Minister for Health James Reilly made the announcement this afternoon.

He said the Government was determined to build a hospital of which we can all be proud, adding that: "In these difficult times the new hospital can be a beacon for all of us."

Mr Reilly said construction could be completed by the end of 2017, certainly by early 2018.

He said €26m "has gone, not to be recovered" after the Mater Hospital site was turned down.

Mr Reilly said the estimated cost of the St James’s proposal was €484m, but that that was “very tight” and that other costs would be involved.

He added that the planning risks at St James's Hospital were moderate.

€200m of the funding for the hospital will come from the National Lottery. €360m will come from the Capital budget and €50m will be available in relation to ambulette care development.

Minister Reilly said there was ample room to build a maternity hospital at the James's campus, however a final decision on this has not been made.

Taoiseach Enda Kenny told the Dáil that he hoped there would be "buy-in" to today's decision.

Mr Kenny thanked everyone who provided care to children in the country's medical facilities.

He said that despite disagreement over the site at the highest level amongst those who provide children's health care services, he hoped there would be support for the decision the Government had made.

The Dáil is to debate the decision on Thursday.

Earlier, Mr Kenny said work could begin immediately to prepare the site at St James's for the hospital.

The Taoiseach said that the Minister for Health had been careful in his assessment of the timeline for completion of the project.

He said construction could commence by 2015 but the issue of planning permission had to be gone through.

Speaking on RTÉ's Drivetime Minister Reilly said that he had been reassured at a meeting with hospital representatives that he had their full co-operation.

Mr Reilly said that while "there was very little to show" for the €26m invested in the Mater site, that cannot be transferred.

However, Mr Reilly said this time around he would be keeping a very close watch on what was being spent on the hospital.

He said he would put in place " a very robust governance structure" and will expect weekly reports and monthly meetings.

Mixed reaction to the decision

The Chair of the Dolphin Report said a site for the hospital was not chosen by the review group, and that that was the decision of the Cabinet.

However, Frank Dolphin said the report laid out the pluses and minuses of the potential sites on offer.

Speaking on RTÉ's Drivetime, Mr Dolphin said that the review group was guided by the clinical synergies that would be gained from the National Children's Hospital being co-located with an adult tertiary hospital.

He said that planning was a major issue in the case of the Mater Hospital, and that while it was a leading teaching hospital, the site was very restricted.

Chairman of the Mater Hospital John Morgan said it was a "very disappointing day."

Speaking on RTÉ's Drivetime, Mr Morgan said the Minister had made clear that the "breadth and depth" of the Mater's clinical specialisation made it a very worthy site, and that had not been chosen due to planning concerns.

However, Mr Morgan said that the hospital had been given permission, it could have re-submitted plans, which would have resolved those concerns.

Mr Morgan said that after the rejection of the initial plan by An Bord Pleanála, the hospital was able to increase the footprint of the site for the project, following the donation of the Old Mater Hospital Building by the Sisters of Mercy.

He said that a decision had been made, which in the opinion of the Cabinet was in the best interest of all children, and that he hoped that would turn out to be the case.

The Tallaght Hospital Action Group expressed disappointment at the decision and said it believed the Tallaght Hospital/SDCC proposal fulfilled all of the minister's terms of reference with regard to accessibility, cost and value for money, timeframe and existing paediatric services.

Political reaction to decision

Fianna Fáil health spokesperson Billy Kelleher said clarity was needed in relation to the funding for the new site.

Mr Kelleher welcomed the choice of St James's but said he would be raising with Mr Reilly "what plans he intends to put in place now to deal with the needs of the existing facilities in Crumlin, Temple Street and Tallaght given that the 2016 timeline for delivery of the new hospital is not now likely to be met.

Sinn Féin said the priority is now to move quickly to the planning and development stage.

Health spokesperson Caoimhghín Ó Caoláin said every effort should be made to complete the project as near to the target date of 2016 as possible.

Labour TD for Dublin South Central Eric Byrne said he was delighted with the decision, which has ended months of speculation and conjecture.