Federal Chancellor Sajid Javid announced that it would provide GBP 350 million for the hospital's completion as the Sandwell NHS Trust business case was officially completed.
It paves the way for a restart of the project after months of waiting for trusted people.
Construction is expected to resume in December, almost two years after the collapse of Carillion, which plunged the project into crisis.
The Trust aims to open the Midland Met by April 2022.
Javid said, "It is absolutely right that the Midland Metropolitan Hospital be completed so that doctors and nurses working for our NHS in the West Midlands can take great care in brand-new, state-of-the-art facilities.
"This £ 350m investment will help meet people's priorities for improving the NHS and improving services available across the country."
Toby Lewis, managing director of the NHS Trust of Sandwell and West Birmingham, who will head the hospital, said, "Midland Met is an important upgrade project for Smethwick and part of the overall development of the Commonwealth Games in Birmingham, including Perry Barr.
"We are working hard to open the hospital in 2022 and having Balfour Beatty on site from December is an important step in this direction.
"Today's announcement by the Ministry of Finance is very gratifying news.
"We are working around the clock to close the close, and agreeing on the final business model and appointing a preferred bidder is the last national approval hurdle to be overcome."
Midland Met, which will be built at approximately two-thirds on Grove Lane in Smethwick, will change healthcare at Sandwell and Birmingham, leading to a reduction in hospital size in Sandwell and City.
However, health services have been overshadowed by delays as the project has moved from one crisis to the next.
Balfour Beatty, who has been refurbishing in the last few months after the unfinished hospital was handed over to the elements, will complete the contract.
It is expected that a construction contract will be signed with the company in the next few weeks, which will be the last hurdle to get the employees back to the field.
Andy Street, Mayor of West Midlands, who has held a meeting with Federal Chancellor Sajid Javid and Health Minister Matt Hancock in recent weeks to push the project forward, welcomed the announcement.
He said, "I am pleased that work on the Midland Met Hospital is finally resuming and that the government has put a significant amount on the table to make it happen.
"The hospital will not only provide state-of-the-art health care to the citizens of Sandwell and West Birmingham, but also pave the way for a significant renewal of the Smethwick district. It is crucial that the hospital is ready for the Commonwealth Games. Today's announcement by the government has made this possible after months of uncertainty.
"I am now looking forward to the construction work progressing ahead of the eagerly awaited opening in 2022."