The South of Scotland European Partnership (SOSEP) has announced a £1.6m funding package for the Dumfries and Galloway leisure complex.
Another major slice of funding has been secured towards the centre
SOSEP confirmed the funding as the council and its partners started work on the Dumfries site.
The £16.5m leisure centre has been hailed as the biggest local authority sport-related project in Scotland.
Last month Sport Scotland announced it was backing the Hoods Loaning development with £1.25m in funding.
Dumfries and Galloway Council convener Tommy Sloan welcomed the 10% contribution towards the development.
"The news that the South of Scotland European Partnership has backed the new leisure complex is tremendous," he said.
"This is going to be a building for the 21st century.
"A centre of excellence where our athletes of today and tomorrow can train and develop their sporting skills and perhaps get ready to compete in the 2012 Olympics."
The new complex is seen as key to the regeneration plans for Dumfries town centre.
The provision of a competition pool means that Scottish Swimming will be able to host national events in the region for the first time.
SOSEP's programme director Donald MacKinnon said he was delighted to announce the award on behalf of Scottish ministers.
He said: "The award of £1.6m is one of the highest made by the programme and recognises the importance to the economy of this flagship project.
"It is integral to regional economic development plans, central to plans for town centre regeneration and fits well with strategies developing arts and culture as well as sport.
"The area's tourism product has long had an emphasis on sport, particularly outdoor pursuits.
"This centre will provide a fresh aspect to the region's existing strengths in that area."
Carlisle firm Kier Northern has now started the leisure centre building programme.