St John of God Hospital announced the expansion project on Friday, with plans to create a new medical services building at the front of the hospital.

The project will include a new 10 bed intensive care unit and coronary care unit and four new operating theatres.

There will also be a new 30-bed inpatient ward completed and a new central sterile services department.

Entry to the new building will be via Drummond Street and is expected to be completed in 2023.

A statement on the hospital's website says St John of God Ballarat Hospital has experienced increasingly high levels of patient activity in recent years.

"Expanding the hospital's size, scope and capabilities now, will ensure that the needs of the local and wider community are met and exceeded," the statement says.

Chief executive Alex Demidov said he was excited about what the expansion meant for the Ballarat community.

"With the growing development of the hospital and its service offerings, local residents will continue to be able to stay close to home and experience the very best in health care right here in Ballarat," he said.

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Committee for Ballarat chief executive Michael Poulton said the announced expansion would 'add to the strength of what is an unbelievable centre of excellence' for medical services.

"I think that is one of the things that COVID has really shown is just how lucky we are to have great medical practice which includes two really good hospitals," he said.

Mr Poulton said the region's population was growing considerably and would continue to do so post-COVID and it was important healthcare services kept ahead of demand.

"The provision for medical services of an excellent level requires further investment. Part of that is going to come from infrastructure, so it is fantastic to see that as part of the mix," he said.

"The future of medical services won't just be in the provision for hospitals. We need to look at a different way of being able to offer medical services that could include more in-home services and more decentralised services.

"We are absolutely going to have to have critical care services and that is where hospitals come into play.

"The ICU beds for example and another ward with 30 beds will always be in demand so it is important in a growing city that we keep developing that level of infrastructure but it can't just be about bricks and mortar in big hospital buildings."

Mr Poulton said the St John of God expansion would also be an opportunity for Ballarat to attract highly skilled workers in both the construction and completion phase, with new jobs for doctors and other hospital staff.

The Sisters of St John of God established service and care in Ballarat in 1915.