Coles and Aldi are set to join Woolworths in a new retail and residential precinct at Dickson.
ACT Treasurer Andrew Barr announced on Thursday the development of more than 150 apartments and 500 car parks, as well as retail and commercial spaces.
The new Dickson Group Centre will be built on the existing car park site at the corner of Antill and Badham Streets, by a consortium including Coles Group Property Developments and Canberra-owned Doma Group.
Canberra firm Cox Architecture will design the centre.
Construction is set to start later this year, with the first retail spaces opening in early 2016.
It will also see the creation of New Dickson Lane - a shared zone incorporating retail, alfresco cafe dining and "high quality" paving and street furniture.
"This investment in Dickson will bring new jobs and economic activity to the inner north," Mr Barr said.
"I am particularly pleased that Coles are partnering with a highly successful home grown developer like the Doma Group and Canberra based architectural firm Cox, to develop this innovative mixed use concept that will be such an important part of the inner north's future."
He said the development would include studio, and one and two bedroom apartments.
Temporary car parking will be available during the construction phase, as an expected 230 spaces are lost from the area.
About 100 spaces will be made available on vacant land north of the Dickson pool and the nearby Tradies club will allow temporary public access to its underground car park.
Mr Barr said there was clear demand for the two new supermarkets and residential development at the site, and the development would assist the growth of Canberra's inner north and link with the Capital Metro light rail project.
"Those of us, long suffering, who have spent too many hours waiting in queues at the existing operator will certainly welcome the competition and enhancement to the Dickson precinct," he said.
"It comes at a really important time for the Territory economy, recognising cutbacks that are occurring in the federal public service. We need this sort of economic activity and it is a real pleasure for me as the local member for the area to make this announcement."
Coles property director Greg Chubb said the announcement followed the company's decision to launch a major expansion across Australia, with an expected 16,000 new jobs and 70 new stores.
The $1.1 billion expansion coincides with the company's centenary in 2014, and will include a promised 2000 jobs for indigenous workers.
“We will now work to lodge a development application in coming weeks and look to commence construction on the satisfactory receipt of a development approval so all in all, we see the construction program being about two years,” Mr Chubb said.
Coles plans to open between 20 and 25 supermarkets each year, while lowering the number of store closures to see store growth of about 2 to 3 per cent a year.
Doma Group general manager of development Gavin Edgar said the company planned to bring the success of recent projects including the Realm Hotel precinct in Barton to the inner north.
"We see this as an opportunity to bring well priced, high quality apartments with the amenity of the Dickson precinct... with all of the flavours of the existing precinct," he said.
"We believe this development will be the catalyst for a number of improvements to Dickson over time."