Mrs Skinner said the major overhaul would give patients throughout the Illawarra better access to health services.

She is joined today by MPs Gareth Ward and Lee Evans to mark the start of construction of the Illawarra Elective Surgical Services Unit.

Mrs Skinner said the purpose-built centre was the largest and most significant capital works project undertaken at Wollongong for several years.

The redevelopment will house seven new operating theatres with 60 new surgical beds and a new 24-bed intensive care unit.

"The NSW Government is responding to the growing demand for local services in the Illawarra through this commitment of $86 million for a new Elective Surgical Services Unit," Mrs Skinner said.

"The integrated unit will also strengthen links with leading research bodies and increase the capacity of the hospital as a major teaching and principal referral centre for the Illawarra and Shoalhaven.

"More than $180 million worth of major enhancements are underway or about to commence in the Illawarra and Shoalhaven Local Health District."

Mr Ward said the Illawarra Elective Surgical Services Unit would be complemented by a new 600-space car park at Wollongong Hospital.

"I was delighted to announce $25.8 million from the NSW Budget for a multi-deck car park to improve parking facilities around the hospital," he said.

"The new car park will be completed by early 2015, the same time as the new unit admits its first patients."

Mr Evans said these projects, coupled with the $14 million expansion of the Illawarra Cancer Care Centre, would result in an "overall enhancement of infrastructure and services for the people of the Illawarra".

"We're getting on with the job of addressing the future health care needs for the people of the region and making sure we're focusing on what is best for patients," Mr Evans said.

The project, which will include an emergency department upgrade, will be completed by 2015.