Mr McClay said the facility would provide a single point of referral for Rotorua children to receive care.
"My hope is all the services will come together so when a child is referred to a specialist by their GP they can go to one place."
Lakes District Health Board chairman Deryck Shaw said the board was "100 per cent behind the initiative".
"We have been working on it for some time now and we want to see it become a one-stop shop that caters to the needs of Rotorua children.
"Children are the most vulnerable in the community so we aim to make this facility into a wellness centre where their families can come for all their child's needs."
Mr Shaw said the new facility was not just about health.
"We hope to see the facility take on a real leadership role and be used for research as well as healthcare. There are multiple dimensions of what it is and what it can be."
A location for the facility has not yet been determined but construction is expected to begin next year.
Mr McClay said the centre could be situated either in the city centre as part of the CBD revitalisation or on the current hospital grounds.
He said there would be consultation with providers, Rotorua District Council and the Rotorua community over the best location and an updated business case would be submitted to the Ministry of Health to confirm the location and scope of the new centre.
Lakes District Health Board portfolio manager for children Pip King said the new facility would better serve families with children.
"We have quite poor child health in Rotorua and some of that will come down to accessibility.
"At the moment, families have to go to one place for their aural and visual screening tests, another for their immunisations and another for their oral care.
"This new child-friendly facility will have everything a family needs under one roof and will be much easier for families to manage."
Ms King said although the initiative was a "step in the right direction", there was still more work to be done.
"We need to figure out how the different health services will work together to attend the whole child.
"We need to have a holistic approach to each child rather than taking care of one aspect of the child's health each."
Rotorua mayor Steve Chadwick said the centre was a "long-awaited dream".
"I think the initiative is genuinely marvellous and fits in well with the people-friendly strategy of the city."
Mrs Chadwick said she was also excited about the potential for the centre to come into the heart of the city and be a centre of information for families.