"I am delighted to have received this news from the AFL today," council general manager Frank Dixon said in a statement.

"This will assist us in the completion of the project and result in fantastic facilities for major events right through to community based sporting groups," he said.

The Federal Government has committed $4 million to the redevelopment, which includes a new northern grandstand, with the State government contributing $3 million, the council $500,000 and the Hawthorn Football Club $300,000.

Mayor Albert van Zetten said he was extremely pleased that the AFL has contributed to the upgrade.

He said it was an exciting development for Launceston and had reconfirmed the AFL's existing commitment to football in Tasmania and Launceston.

Work has already started on the project to improve Aurora Stadium and Invermay Park with the old heritage stand being dismantled so it can be relocated to Invermay Park.

The whole redevelopment is expected to be completed by December, 2010."

The council says the benefits of the redevelopment will include increased seating capacity available for major events, such as AFL games, and in turn will increase visitor numbers to the region providing major economic flow on effects for local businesses.