THE €405m buyout of the National Lottery will be used to build the National Children's Hospital.
British lottery operator Camelot has joined in a consortium with An Post to buy the 20-year lottery licence.
Half of the sum is due to be paid in December, while a second payment will be made next October when the 20-year term of the agreement begins.
Some of the cash will be used against Ireland's national debt while a significant portion will be spent on capital projects such as the Children's Hospital.
Public Expenditure Minister Brendan Howlin said a legal basis was set out before the new lotto arrangement was agreed by Government. He said the Government had to go through EU law tendering process.
The agreement with the consortium will be used "to get us a pool of money to build the National Children's Hospital".
"We said let's look for an up-front payment this time rather than a gradual payment so that we can actually do that important national work," he said on RTE's Morning Ireland.
"We will get the first payment of just over €200m when the contract is signed. The second payment of €200m will be next year when the actual new licence comes into effect.
Mr Howlin said the money was "ring-fenced" and any other cash gained from this or from the sale of State assets such as Bord Gais will be used for job creation.
"Some of it, by agreement, will be used to retire debt. I can't spend money I don't have yet. We will see what money comes from the Bord Gais sale."
He said lotto players will get good value and the prize fund of the lottery will remain the same.
Health Minister James Reilly said he believes the hospital can be built by 2018.
It will be located on the St James's Hospital campus in the south inner city.
Mr Reilly said he did not believe this time there would be a refusal for planning permission from An Bord Pleanala.
The aim is to secure planning permission by December 2014.
The sale of the national lottery will be closely watched by Troika officials as Ireland prepares to exit the bailout.
Speaking today, Junior Finance Minister Brian Hayes said the portion of the sale proceeds to be used to pay off national debt has "yet to be determined".
"It's not going to be half of it or even three quarters of it I suspect," he added.
"The great majority of the funds that will become available in this November/December period, ie the €200m, will be used for capital infrastructural projects – the continued roll out of new schools, infrastructure, roads, that kind of thing to keep the construction sector get off its feet again."