London mayor Boris Johnson has signalled the start of building works on the Tate Modern extension.
The £215m project will ease the strain on the current gallery space which was designed for two million visitors each year but pulls in five million.
The development, which is due to be completed in 2012, will increase the venue's exhibition space by 60%.
At the site on London's South Bank Mr Johnson hailed the development as leading regeneration in the area.
"This is the beginning of a fantastic new project... Many of the great buildings in the world have been fusions of architectural styles," he said.
Tate Modern occupies the former site of Bankside Power Station, designed by Giles Gilbert Scott and decommissioned in the early 1980s.
It was converted by architects Herzog & de Meuron, who designed the extension, which was granted planning permission in March 2009.
Work will now start on the oil tanks of the former power station, which will be used to house artwork and performances.
Demolition work will soon begin to clear the area to the south of Tate Modern and open up a new route from the Millennium Bridge through the building onto a new plaza, which will draw people into Southwark, in south London.
Tate director Nicholas Serota said: "We look forward to creating one of the most exciting cultural buildings in Europe which will bring direct benefits to Southwark and London as a whole."
Tate Modern said it reaches more than twice the number of visitors as the Pompidou Centre in Paris or the Museum of Modern Art in New York, but it has around half the gallery space.