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Kier Property is to draw up plans for new hospital and hundreds of homes
Kier Property has been select to build the multi-million pound health campus development in West Watford.
It was chosen from a shortlist of two after council and hospital bosses were impressed by its designs for the site.
A joint statement said the scheme could potentially create 1,600 new jobs in the area, regenerate derelict land and reduce traffic congestion.
Watford’s elected mayor Dorothy Thornhill said: "This announcement marks a significant step forward for the health campus and brings us closer to seeing our aspirations for the area finally come to fruition.
"The health campus is a once in a lifetime opportunity. It will deliver significant benefits to the town and gives a huge boost to our local economy at a time when other areas of the country are seeing reductions to public investment and services.
"There is still a lot to be done but I am delighted at the prospect of working with Kier on its exciting proposals and getting the best possible results for Watford and our residents."
However, no details have yet emerged about how much of the historic Farm Terrace Allotments developers plan to use for the site.
Controversy erupted over the plans in June when allotment-holders were told the previously-protected plots may need to be built on to make the project economically viable for developers.
The project, which will include a new access road to the M1, has been cited as crucial for the future of Watford General Hospital .
Following the Kier announcement Jan Filochowski, chief executive of West Hertfordshire Hospitals NHS Trust, said: "It [the health campus] will transform the hospital facilities and site, creating green open spaces, tranquil water frontage and welcoming public spaces.
"Emergency and normal access to the site will be dramatically improved."