The project, which will commence in 2016 and provide student accommodation in Bega, Cooma and Moruya, will focus on medical, nursing, midwifery and allied health training.

Professor Amanda Barnard, head of the ANU Medical School's Rural Clinical School, said the project was funded by the federal government five years ago, but was delayed after former partner Medicare Local was disbanded.

"The project will enhance the successful rural clinical school program at ANU, which has provided medical student training in southeast NSW for 10 years with a number of graduates returning to work as rural GPs and specialists," she said.

Professor Diane Gibson, dean of the University of Canberra's faculty of health, said the project would provide valuable hands-on experience for students in rural and regional areas.

"The project will also support regional workforce development in the longer term as university-trained students who undergo a rural clinical placement are more likely to seek work in rural and regional areas after graduating," she said.

"One in five students at the University of Canberra comes from rural and regional NSW – so UC is very much a university of and for the region."

The multi-purpose training facilities will be based at the new Bega hospital and existing Cooma and Moruya hospitals, allowing students to share the classrooms with health professionals.

Professor Gibson said the initiative would strengthen the quality of health care available in southeast NSW and encourage more students to contemplate a career outside metropolitan hospitals.

"We know that students who have a regional placement during their training are more likely to apply for positions in regional areas where the workforce shortages are most pronounced," she said.

"Students also tend to have a little more time to spend with patients as there are learning and something patients are able to learn along with the students, and that's positive".

Professor Barnard said teamwork and collaboration were critically important in rural hospitals and the training facilities would equip students for work outside Canberra.

"There will be significant training structure at the Bega hospital with tutorial and clinical skills teaching rooms and facilities that can also be used by hospital staff," she said.

"There is a huge need for medical training in rural areas and many of the students who undertake placement and training in south-east NSW go on to work there after graduation."

Students from both universities will have access to the training facilities while on placement with rural hospitals.

Professor Gibson said the facilities would be made available to hospital staff to become involved in student training programs, along with professional development opportunities.

"This project will ensure students have had the experience of working in regional Australia and some of them may come from regional NSW, so they may be going back to practice in their regions," she said.

"They will have had the opportunity to understand how things works in the regional health services as well as metropolitan hospitals."

Assistant Minister for Health Fiona Nash welcomed the investment in training for rural doctors and medical professionals.

"Having health professionals train in rural areas greatly increases the likelihood of them practicing in rural areas once they're qualified," she said.

"As a rural NSW resident myself I'm extremely pleased with this investment in southeast NSW."