Welsh Health Minister Jane Hutt says she won the "big prize" with a £200m spending increase on NHS buildings.
GP care is in line to receive more funding
But she warned that a £1.8bn overall increase in the health budget by 2008 had to be accompanied by reforms.
Investment in NHS capital projects in Wales will rise from £107m this financial year to £309m in 2007-08.
Meanwhile, Conservatives have defended their failure to attend a briefing where Plaid Cymru and the Liberal Democrats had advance budget details.
Under the capital spending increase announced in Monday's budget, seven new community hospitals will be built across Wales.
Ms Hutt said: "The big prize in the budget is capital spending. If we're going to change the way we run the health service, we need capital spending.
"The capital budget will more than double."
Ms Hutt said her aim was to improve health through early intervention by boosting the primary care sector and in turn reducing pressures on secondary care.
Estimated cost of new community hospitals
Caerphilly - £100m
Cynon Valley - £44.3m
Ebbw Vale - £38.5m
Rhondda - £36.7m
Porthmadog - £14.7m
Holywell - £9.9m
Tenby - £4.8m
The budget included £24.5m to health promotion scheme Health Challenge Wales and £40m to bring GP and dental surgeries up to date.
The Labour manifesto promise to deliver free prescriptions by 2007 will also be met from the budget, with the cost estimated at £30m.
Ms Hutt announced on Tuesday that prescription charges will be reduced to £4 by April 2005 as part of the phasing out.
But Ms Hutt warned that the overall £1.8bn increase in the health budget during the next three years had to be accompanied by reforms.
She added: "We also need reform as well as investment. We need to invest in improving health and early intervention and taking the pressure off hospitals, and that is what this draft budget in going to deliver."
But Plaid Cymru claimed that increases in Welsh health spending were failing to keep pace with rises in the NHS in England.
Ieuan Wyn Jones, leader of the Plaid group in the assembly, said the discrepancy would ensure Welsh waiting lists would remain longer than those across the border.
Jane Hutt has been health minister since the assembly was founded
The Welsh Conservatives have defended their decision not to attend a private advance briefing on the budget.
Both Plaid and the Liberal Democrats were given details before Welsh Finance Minister Sue Essex announced them on Monday.
Conservative finance spokesman Mark Isherwood told fellow AMs: "I give more than one day a week to my constituents and my
diaries on a Monday are blocked weeks and weeks and weeks ahead.
"I would thank Sue Essex, who understood this and arranged to meet me at 9am
and the time and patience she gave me."
He said he had read the budget before giving comments to journalists.
But Labour said the Conservatives should apologise for commenting on the budget despite not attending the briefing.
Labour AM Carl Sergeant said: "For neither the leader, the finance spokesman or any Tory for that matter to turn up to work the day the Welsh budget was published is astounding."