Two east London hospitals are to get £1bn of investment for redevelopment.
The Royal London will become the UK's biggest new hospital
The overhaul of St Bartholomew's and the Royal London is understood to be one of the biggest NHS funding deals in recent years.
Barts and The London NHS Trust has announced the preferred bidder is the consortium Skanska Innisfree.
The Royal London will be the UK's biggest new hospital and Barts will get a state-of-the-art Cancer and Cardiac Centre of Excellence.
The plans are funded through a private finance initiative which involves private companies being appointed by public bodies to design, build and pay for capital projects such as roads, hospitals and schools.
Under the scheme, the private sector puts the money up front and the public sector pays an annual charge over the next 30 years or so.
The historic Georgian buildings of Barts, the UK's oldest hospital, will be refurbished alongside a new building which will house the cancer and cardiac centre.
The square, now used for parking, will become a pedestrian plaza.
The new hospital at The Royal London will feature two glass towers, one with a helipad for London's Helicopter Emergency Medical Seervice (HEMS), which is based there.
The two hospitals will have 1,248 beds - 186 more than they have currently.
More than 40% of the beds will be in single rooms with en suite facilities and the rest in four-bed bays.
Managers say the wards will be light and airy with natural ventilation and separate areas for men and women.
Trust Project Director Steve Saunders said: "This £1bn scheme will transform the Barts and the London Hospital experience for patients from London and beyond.
"The hospital environment has been designed to be warm, safe, welcoming and healing."
Alderman Robert Finch, the Lord Mayor of the City of London welcomed the scheme.
"Barts of course has a special place in the hearts of all those who live and work here, having been in existence nearly as long as the City itself.
"The Royal London Hospital also has a very rich history and I know that everyone in the City and beyond will be delighted to see its long awaited redevelopment finally getting under way."
The main building work is due to start in 14 months' time with the new hospitals fully completed by 2012/13.