The FAI has agreed to provide €750,000 of funding for a €2.7 million development at the RSC.
This would see the ground's seated capacity reach 3,000 and bring the facilities in compliance with the requirements of UEFA.
Waterford City Council will now proceed with the project which has also secured a total of €1 million in funding from the Department of Arts, Sport & Tourism.
As well as a new stand opposite the existing structure at Kilbarry, the scheme, which is due for completion in 2008, includes additional ancillary facilities and turnstiles.
