Earlier this year, work had to be paused as the overall cost of the project more than doubled from £18m to £37m.
The increase was blamed on the larger scope of the build, ground condition complexities and the increasing price of materials.
The Government has now agreed to met the £19m funding shortfall just weeks after Burnley Borough Council granted planning permission for the next four phases of the scheme along the River Calder.
This clears the way for contractor VolkerStevin and Jacobs to resume work in summer 2025 on the vital scheme.
Environment Agency has already completed stabilisation and reinforcement works for two sections of the current flood defences in Padiham around the town hall, as part of the project.
Padiham flood defence scheme overview
The next phases will see new and raised linear flood defences along both banks of the River Calder from Lune Street to Station Road Bridge and along both banks of Green Brook from its confluence with the River Calder to the Padiham Greenway.
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