A decision in this regard was taken at a meeting of the Cabinet presided over by Chief Minister Sheila Dikshit.
"We have decided to set up a 200-bedded hospital in Burari area to improve medical facilities," Dikshit said.
Health Minister A K Walia said the Cabinet had approved a budget of Rs 200 crore for construction of the hospital building.
He said the hospital would be constructed as per green building concept.
The government has set a target of starting construction of seven other hospitals in the city during the current year.
Officials said four 200-bedded hospitals would come up at Madipur, Siraspur, Hastsal and Ambedkar Nagar and two 100-bedded at Sarita Vihar and Pooth Khurd.
A 750-bedded hospital is also being set up at Dwarka.
