The government has announced it will match a philanthropist's $50 million donation to build Wellington's new children's hospital.
Mark Dunajtschik pledged the money to the Capital & Coast District Health Board in July 2017.
The government would contribute $45.6 million.
The hospital will have 50 inpatient beds and is expected to open by 2021.
DHB Māori Partnership Board member Peter Jackson said a mauri stone-turning ceremony today at the site marked the official start of construction.
"Around the world stone-turning ceremonies are quote common so this is the Māori version if you like. Stones that have been gathered from your tribal areas.
"One came from Rarotonga others came from Taranaki and around Waikanae as well."
Health Minister David Clark said the current arrangements for children patients and their families were not ideal.
"The current hospital is almost 30 years old with services located in different parts of the regional hospital. This is not ideal for children or families who are already going through a stressful time, nor for hospital staff who want to provide the best service for their patients.
"This new, purpose-built hospital will provide these services under one roof. It has been designed with children and their whānau at the centre while allowing for the provision of high quality services, as well as encouraging clinical collaboration and communication."
The new hospital would include increased ensuite bathrooms, more single bedrooms, a larger more functional unit for assessing children and improved quality or care and experience for patients and family.
Existing child hospital and outpatient services would move into the new hospital, located next to the existing one and connected by a link bridge.
Children that required emergency care, intensive care, radiology, surgery and other specialist services would received these from Wellington Regional Hospital.
About 4000 children each year were admitted to hospital, with just under half of them under five-years-old.
It was unclear what services would take over in the current children's hospital once the new one had opened, but it would be repurposed.