MK Council agreed a £10m investment in a new cancer therapy centre at the hospital.
The centre will bring together oncology, clinical haematology and cancer related chemotherapy services.
Councillpr Rob Middleton said: “The basic idea is to bring together all cancer services under one roof at the hospital.
“I am delighted that we are able to invest £10 million in the new centre.
“This comes on top of £5.73 million we have already invested in the hospital.
“I am very clear that our university hospital is going to become a cutting edge centre of excellence in the country.”
The new 24 bed cancer centre will cost around £15 million – therefore after the councils contribution, when added to £2m provided by a health charity – 80 per cent of the funding will be agreed.
This will then allow the hospital to commit the remaining money from capital funds.
Council leader Pete Marland added: “We work very closely with the Milton Keynes University Hospital.
“Despite the financial challenges we face, we have found the money to help in the fight against cancer.
“I am proud of our partnership with the hospital.”
According to the council, this money will not be provided by council tax but instead has been secured from developers as part of the ‘infrastructure that underpins’ the building of new homes and communities.
Councillor Middleton added: “I am pleased that the Labour led city council is managing its limited resources effectively and we are able to vote through further investment in to our hospital.
“This comes on top of our decision last month to invest £13.5m in a new GP medical centre on the west flank at Whitehouse.
“We have now invested £30m in our hospital and new medical centre.”