The Irish Rugby Football Union (IRFU) and Football Association of Ireland (FAI) were given Government backing to transform the world's oldest international rugby stadium into a 50,000-seat state-of-the-art sports arena at an estimated cost of 250million euros.
The stadium, which will include three-tier structures for the East and West Stands and single-tier stands at the Lansdowne Road and Havelock Square ends, is due to be completed by 2008.
IRFU chief executive Philip Browne said: "The vote of confidence in Lansdowne Road enduring as one of the most renowned and popular venues in European sport is great news for the IRFU and for Ireland.
"We greatly appreciate the support of the Government in endorsing our ambition that Irish rugby and sport in general should have the facility of a stadium of this standard and magnitude."
The Government have pledged 167million euros towards the cost of the development, with the IRFU and FAI expected to provide the remaining 83million euros.