A crowd of hundreds gathered at the site of the future campus - opposite the landmark Nan Tien Temple at Unanderra - for the ceremony to bless the long-envisaged project and mark the start of construction.

Work on the campus, cultural centre and art gallery is set to begin in earnest in the next week.

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"We are looking forward to creating this education and cultural centre in the heart of the Illawarra to serve the community, national and international students, lecturers, researchers, visiting academics, tourists, businesses and artists," Nan Tien Institute's board secretary Venerable Miao You said.

The historic event was part of a day that also included the inaugural graduation ceremony for postgraduate students who completed the institute's Graduate Certificate or Diploma of Applied Buddhist Studies.

The first phase of the new campus - which will include an art gallery, library, auditorium, teaching areas, a meditation hall, and roof garden - is expected to be completed in 2014 and will cater for 300 students.

The institute plans to cater for 3000 students and offer a range of undergraduate and postgraduate courses all grounded in Buddhist wisdom and values.

The "piling and blessing" ceremony began with a lion dance followed by an Aboriginal Welcome to Country.

Throsby MP Stephen Jones also read a statement at the event from Prime Minister Julia Gillard, in which she congratulated the Nan Tien community on the "ambitious, visionary project".

Wollongong City Council sold the former landfill site opposite the temple at Unanderra for a token $1 in 2001.