There was an outpouring of emotion and an overwhelming feeling of relief as a pledge of up to $3 million was made by the Government to the Hundertwasser Art Centre with Wairau Maori Art Gallery project.

The pledge means the revised fundraising target of $20.97 million for the project has now been reached.

Arts, culture and heritage minister Maggie Barry made the announcement in front of Te Kakano - the Hundertwasser Folly near where HAC will be built at Whangarei Town Basin - yesterday.

She said the Regional Culture Heritage Fund had been specifically changed to help projects such as this one.

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"We are just thrilled and delighted to be able to help."

Hundertwasser project reaches revised fundraising target with latest announcement.

She said the feeling of relief from project backers Prosper Northland Trust and supporters was tangible.

"The money and the faith that we have put in you is equal to the amount of faith and the amount of goodwill that has emerged from this community to do this for yourselves," Ms Barry said.

This funding is in addition to the $4 million pledged last year through the Northland Economic Action Plan.

Yesterday's announcement came just days after the NZ Lottery Grants Board announced a significant projects grant of $3.5 million for the project.

That grant got the project past the $16.25 million which was required by June 30 following the controversial referendum in 2015.

The project cost was revised due to price increases and stricter earthquake proofing requirements.

Hundertwasser Art Centre project director Andrew Garratt was lost for words after the announcement.

"It's just staggering, I'm just overcome with emotion."

He said so much work has gone into the project, particularly from the volunteers.

"The community's made it happen."

The tears flowed for fundraising team leader Helen Whittaker. "I'm absolutely elated. It's a little bit surreal."

She said the only condition on the new funding is they need to make use of it by December this year.

"All our supporters have been our fuel that kept us going."

The plan is to begin construction before Christmas.

Whangarei MP Dr Shane Reti said it is important for the economy and tourism in the area and many things will trigger from it.

He said Cruise Ship New Zealand had told him ships it would stop in Whangarei once the project was complete.

Prosper Northland Trust chairman Barry Truss expects it to be one of the most iconic buildings in the country.

"It's just unbelievable. We were always confident we were going to get there but not this quickly."

He said they were "quietly concerned" particularly with cost increases, because they felt they had exhausted their funding opportunities locally.

"Having a project like this will definitely be a catalyst for a hotel."

Chairwoman of the Wairau Maori Art Gallery Charitable Trust Board Elizabeth Ellis said it was a real watershed moment.

"This will be the first time we will have a dedicated Maori art gallery with high-quality Maori artists, many of them belonging to the Toi Iho trademark."

Whangarei mayor Sheryl Mai said a report would now go to the council outlining the next steps.

"I am very proud of the sustained effort and vision of the people who have backed this project."