The funding will be used to improve the hospital’s surgical centre, as well as build a new outpatients unit and ophthalmology centre.
Once the business case is finalised and approved, construction work is expected to take a year to complete.
Chief secretary to the Treasury Danny Alexander said: “I’ve been working closely with local partners who have highlighted to me how important it is for Burnley Hospital to have the money it needs for a complete refurbishment. So I’m delighted to be able to announce that I have agreed in principle to provide £15.6m for the hospital. This is great news for the people of Burnley and I’m now calling on the Department of Health to work with East Lancashire Hospitals NHS Trust to ensure that this goes through as quickly as possible so work can start on this crucial local resource.”