Thousands of free MRI scans will become available at Dubbo Hospital for patients who currently are transported into the city for the test.
The state government has committed to buying an MRI machine which will be installed in a three-storey building being constructed under the hospital's stage four redevelopment.
On Thursday, Member for Parkes Mark Coulton was "thrilled" to announce that the federal government would supply the hospital with an MRI licence.
Mr Coulton, who was lobbied by Dubbo Hospital clinicians for the licence, said it would save lives and reduce costs.
"It means that if a patient is in hospital and they need to have an MRI scan for whatever reason, that can be done within the hospital precinct and it will be billed to Medicare," he said.
"There are other MRI facilities in town that do a wonderful job...but the issue is that if patients have required an MRI they've needed to be transported by ambulance or private vehicle to a location outside the hospital."
Mr Coulton said a hospital-based and Medicare-funded MRI machine would be "much more convenient" for patients and medical professionals alike.
The licence for Dubbo Hospital's MRI machine covers 3354 scans a year which the MP suggests will be ample.
"Just doing the mental arithmetic, it mightn't be possible to go over when you consider the number of days in the year," he said.
Mr Coulton confirmed an MRI scan at the hospital in the future "won't cost the patient a cent".
An MRI is a commonly-used medical scan which gives a detailed view of the soft tissues of the body such as muscles, ligaments, brain tissue, discs and blood vessels.
It is used by doctors to diagnose and monitor a number of different medical conditions including cancer, trauma and sporting injuries.
Mr Coulton noted that the hospital was also set to acquire a PET scanner for the planned Western Cancer Centre.
The state government is contributing $25 million and the federal government $10 million to the construction of the centre with tenders set to be called in mid-2019.