Holiday firm Center Parcs is to build a new resort in Woburn, Bedfordshire - creating 2,700 jobs in the process.
Center Parcs Woburn Forest will be the activity holiday group's fifth site and is expected to open in spring 2014.
Some 1,500 permanent jobs will be created at the new resort, while another 1,200 contractors will be employed during the construction process.
The development is expected to inject over £250m into the British economy.
Blackstone (NYSE: BX - news) , the US equity firm that owns Center Parcs, will invest £100m into the project while four UK high street banks - RBS (LSE: RBS.L - news) , Barclays (LSE: BARC.L - news) , HSBC (LSE: HSBA.L - news) and Lloyds - have committed a construction loan of about £150m.
The new holiday village will have 625 forest lodges, a 75 bed hotel and spa, sports facilities, swimming pool, restaurants and retail outlets.
With another UK recession looming and disappointing new data from the manufacturing sector, Prime Minister David Cameron has welcomed the announcement.
He said: "Center Parcs is much loved by many and this new site is not only great news for holidaymakers but great news for the economy too.
"This expansion and the jobs that it brings will be a real boost to growth and a sign of the increasing investor confidence that there is too."
The move will put an end to speculation that Blackstone, which bought Center Parcs in 2006, was going to sell off at least part of the business.
The Confederation of British Industry also welcomed the announcement.
CBI director-general John Cridland said: "With services making up three quarters of our economy, it's vital that we continue to attract and encourage investment into sectors such as leisure, so this is a significant development.
"I have no doubt that this major investment will prove to be a substantial job creator for the area in the coming years."
Center Parcs' existing sites are at Whinfell Forest in Cumbria, Sherwood Forest in Nottinghamshire, Elveden Forest in Suffolk and Longleat Forest in Wiltshire.
The company originally identified Warren Wood near Flitwick for a new site in 2004 but the development sparked protests about its impact on the green belt.
Center Parcs did not get planning permission until 2007 following a public inquiry and it was then further delayed by the economic downturn.
About 10% of the trees will be cut down to make way for the project but it will plant 40 acres of trees elsewhere to offset the impact.
Center Parcs chief executive Martin Dalby said the site is in "a fantastic location" because it is an hour's drive away from the north of London near the M1 motorway.
He said: "We think this will be extremely successful. It's fantastic news for the local economy."
Center Parcs, which has been operating in the UK for 25 years, is trading strongly, with occupancy rates of around 97% throughout 2011 and positive booking trends for 2012.
Mr Dalby told Sky News that the business had done well throughout the last recession, helping to drive this latest expansion.
He added that Center Parcs has had a "fantastic track record for many years and was doing well before the word 'staycation' was even invented".
In recent years, Center Parcs has invested in building new luxury tree houses as well as improving restaurants and shops.