Mrs Black said the extra funds would make a huge difference to the hospice, especially since only 48 per cent of its funding came from the district health board.
The rest of the hospice's $1.6 million annual operational costs was funded by donations and funds raised by the hospice shops. However, the hospice would still need community support to cover costs.
"We're incredibly grateful for the generosity and support of the community, it's something we are always in need of."
Health Minister Tony Ryall said last year more than 15,000 people received care and support from hospice services throughout New Zealand and hospice staff made over 145,000 visits to people in their homes.
"As our population ages, more and more people will need palliative care. Nearly two-thirds of the money will go towards helping local hospices expand community palliative care services to better support terminally ill people at home and in aged care facilities.
"The other third will be used to create new palliative care nurse specialist and educator roles."
Mr Ryall said the extra $20 million a year was in addition to the $15 million a year increase from the Boost Hospice Care initiative announced in 2009.