Building work on an armed forces training centre in the Vale of Glamorgan should start in 2009, bringing up to 5,000 jobs.
The academy is predicted to provide an economic boost to the area
The Ministry of Defence (MoD) has confirmed it is to go ahead with the Defence Training Academy at St Athan.
The MoD said in January it planned to train servicemen and women at the academy.
But there are doubts whether other training, such as security, will also be carried out at the base.
The MoD confirmed it would proceed with the main part of the development - the training academy, which is known as Package 1.
It said building work should start in 2009, with the final phase expected to be completed by 2013.
Civilian staff should be able to transfer there after 2011.
But the MoD said it was still negotiating the smaller, second phase - Package 2 - which would provide training for logistics and personnel staff, security, intelligence and photography at the site.
The two training packages are worth a combined £16bn and up to 5,000 permanent jobs, although the majority of positions would come with the first phase of the academy.
The decision to announce the start of the building work came after the MoD said it would "decouple" the two packages, meaning they can be treated separately.
Service personnel from all armed forces would be trained at the site
"The jewel in the crown of the whole academy concept has always been and will always be the engineering and ICT tri-service training centre. This is what will now go ahead," said First Minister Rhodri Morgan.
"While we remain quietly hopeful that the smaller second package will eventually come to St Athan as well, the important thing is to get the main part of the scheme, as announced by the Ministry of Defence this morning.
"This will bring thousands of new jobs to Wales and thousands of trainees, bringing their spending power to the area to be taught all the key maintenance skills for all the equipment used by all three services - skills that will serve all those trainees just as well in civilian life after they leave the armed services."
Vale of Glamorgan MP John Smith said he was delighted that the "lion's share" of the contracts would be at St Athan.
Exploring other options
"The MoD's decision to move ahead with Package 1 is good news and demonstrates its firm commitment to St Athan," he said.
An artist's impression of how the military academy would look
"Whilst negotiations are ongoing in relation to the second contract, the door remains firmly open for the whole training programme to be delivered at St Athan.
"The decoupling of the contracts could enable us to minimise any unintended impacts on the local community. If a project of this size is built in a timely fashion, then the benefits for the South Wales economy will be maximised."
The MoD said: "It is anticipated that we will be in a position to commit to the final developmental phase of the project in the spring of next year with a view to signing the main contract within a further year".
The MoD said it was still negotiating Package 2 with the private consortium Metrix, which won contracts for the first phase of the academy, but is now also exploring other options. A final decision is likely early next year.