A new Seamus Heaney Centre in his native Bellaghy will be part-funded by the Assembly.
Stormont has pledged almost £1m towards the facility, which will be built in the Co Londonderry village as a tribute to the area's most famous son.
The overall cost of the Seamus Heaney Arts and Literary Centre will be £4.2m.
Deputy First Minister Martin McGuinness and Culture Minister Caral Ni Chuilin yesterday announced funding of £980,000 towards it.
Mr McGuinness said that the new centre would be "a fitting way to celebrate the contribution of a literary giant".
"Through this centre, the work, writings and life of Seamus Heaney will continue to enrich all our lives and move us deeply," he added.
More than 2,000 books and reference materials from the personal library of the late poet will create a haven for literature and the arts in the visitor centre, which has been designed to celebrate the life and work of the Nobel Laureate.
The building is being developed with the support of the Heaney family, and is expected to attract up to 50,000 visitors annually when it opens next year, Culture Northern Ireland said.
Professor Fran Brearton, from Queen's University's Seamus Heaney Centre for Poetry, welcomed the development and its location so close to the poet's home village.
"It is a community space, which is right because Heaney was always so much part of that community," she added.
"Also, whenever people go to Bellaghy to visit Heaney's grave, they want more.
"As I understand it, the centre will be a museum space with artefacts from his life and books from his library, so people can see some of the things he was reading.
"If you are telling the story of Heaney, you are telling the story of Northern Ireland."
Ms Brearton added that while Heaney was synonymous with Ulster, his influence reverberated around the world as one of the English language's greatest poets of the past 50 years.
She also confirmed that Queen's would be working with the new centre on a number of future projects.
Heaney died in Dublin on August 30, 2013 aged 74 after a short illness.