A £4.2 million car ferry service between Donegal and Derry is to be mainly funded by the EU and the International Fund for Ireland, with contributions from the Government and local authorities on both sides of the Border.
About £2 million will be contributed by the EU Special Support Programme for Peace and Reconciliation and £1 million by the IFI for the service across Lough Foyle between Greencastle, Co Donegal, and Magilligan, Co Derry.
The Irish Exchequer is to provide £700,000 towards the cost of the ferry, with the balance of around £500,000 coming from Donegal and Limavady local authorities.
"This project, by its physical location, will address social and economic inclusion for two communities which have long faced each other across Lough Foyle," Mr Willie O'Connell, chairman of the North West Cross Border Group, said.