Northern Ireland Secretary Brandon Lewis has approved the business case for the multi-million pounds Derry City and Strabane District city deal.
Mr Lewis and Stormont Finance Minister Conor Murphy signed the deal's heads of terms on Wednesday morning.
It marked "a major milestone" towards the deal's completion, said First Minister Arlene Foster.
Through the deal, funding of £250m will be invested in the region over 15 years with hopes of creating 7,000 jobs.
It is the largest single investment made in the region with the potential to add about £210m a year to the area's economy.
Ten major projects are proposed within the deal with a focus on health and life sciences and digital industries.
What is in the city deal?
Some of the projects proposed in the deal include:
- The medical school at Ulster University's Magee campus
- The creation of a centre for industrial digitisation, robotics and automation
- The establishment of a cognitive analytics research laboratory
- Healthcare innovation and research projects
- A digital programme to tackle connectivity issues across the region
- Redevelopment of Derry's riverfront
- Urban regeneration projects and environmental initiatives
- Redevelopment of Strabane town centre
- Infrastructure and tourism projects
The UK and Stormont governments have each committed funding of £105m for the deal.
Another £40m is being provided by Derry City and Strabane District Council and private partners.
It has been previously confirmed £30m would fund Ulster University's new graduate entry medical school in the city.
'Hugely beneficial opportunity'
Speaking to BBC Radio Foyle, Mr Lewis said: "The money will flow over a period of years but the signing of the deal today is a legal commitment from everybody about moving forward.
"Financially it is effectively the biggest, some would argue, across the UK with the government investing £105m in capital through this package."
A significant moment as Mayor of Derry and Strabane Brian Tierney joins FM Arlene Foster, DFM Michelle O’Neill, and SoS Brandon Lewis in signing the City Deal Heads of Terms document #CityDealDLS pic.twitter.com/QpGLYp9bm3— Derry Strabane Cncl (@dcsdcouncil) February 24, 2021
Mr Lewis said this investment should not be hindered by financial pressures caused by the coronavirus pandemic and would instead help the area out of the crisis.
He added: "It is about ensuring the north-west has that hugely beneficial opportunity and it opens up for job growth in the area."
He also revealed that the UK government was speaking to Stormont departments about expanding the number of students at Ulster University's Magee campus in Derry.
A commitment was made under the New Decade New Approach deal to have 10,000 students at the site.
But concerns had been raised previously that it may not be possible due to financial issues and caps on student numbers.
First Minister Arlene Foster said the north-west was a region of "vibrancy and ambition" and that the executive "was working with the UK government, the council and a wide range of stakeholders to turn that potential into reality through collaboration and innovation".
Deputy First Minister Michelle O'Neill described the deal as a "game-changer for the regional economy, driving growth and creating opportunities for people".
She added: "There is an abundance of potential in the north west and this funding will help to harness it for the good of all."
Infrastructure Minister Nichola Mallon also welcomed the deal, but said it was "one part of the puzzle" in achieving greater investment for the region.
"Let us all now work together to make sure today becomes the catalyst to building and crucially delivering, that new tomorrow for local people," she said.
Finance Minister Conor Murphy said the deal will attract future development and investment in the region.
"These aren't stand-alone projects, these are part of a bigger investment strategy which I think can transform the north-west," Mr Murphy said.
The UK government has been involved in talks with the political parties in Northern Ireland about several city deals.
As part of its confidence-and-supply arrangement with the Democratic Unionist Party (DUP) in 2017, the government committed to work with the executive and other stakeholders on the deals to boost investment in the Northern Ireland economy.