Plans are being set in motion again to build a pier for the Royal Yacht Britannia, a cruise liner terminal, lock gates, a new road link to the waterfront and a public esplanade.
Edinburgh City Council will use tax incremental financing to kick start the project. This will see the council takes out a loan to build the development to be paid off later from collection of improved business rates in the area.
It is estimated the project could eventually attract £660m of business investment and 4,900 jobs.
Finance Secretary John Swinney said the scheme was a first for Scotland.
He said: “Westminster cuts to the Scottish budget have emphasised the importance of finding new funding models to deliver crucial infrastructure projects such as the Edinburgh Waterfront, that can unlock further economic development, whilst ensuring maximum value for the public purse.”