Member for Dubbo Dugald Saunders made the announcement early on Monday, flanked by Deputy Premier John Barilaro and Treasurer Dominic Perrottet.

"This has been something that has been talked about for a number of years," Mr Saunders said.

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"Today marks the start of a new way forward as far as rehab in this region, this funding means the construction of a facility will happen."

"We're matching the $3 million put up by the federal government heading into the last election, plus the recurrent funding for a couple of years, with more obviously needed in the future."

The recurrent funding will be necessary to provide the detox and rehabilitation services the facility will provide once constructed, with financial figures estimating that the facility will become operational in the 2022 - 2023 financial period.

Mr Perrottet stated that construction on the facility would take place over 12 months once a suitable location had been found.

"We want to make sure that the facility we invest in here is able to provide for the entire local area, it's a big area, we know that Ice is a big issue here, and we think this investment today will go a long way to addressing those concerns," Mr Perrottet said.

"Construction will take place over the next 12 months, in a few years, those recurrent costs will commence, around $2.5 million a year."

Mr Perrottet said that drug rehabilitation was a key area in which at-risk people can be put back on track.

"Particularly locally, drug addiction has been a significant issue and we know that drug rehabilitation can be one of those areas that can drive better outcomes for vulnerable people to get back on their feet and on with their lives," Mr Perrottet said.

The facility will be run and operated by the state government, with both Mr Saunders and Mr Barilaro downplaying recent efforts by Dubbo Regional Council to push for a centre, with Mr Saunders saying he was 'surprised' by how much council had spent recently.

"At the end of the day, we all want the same thing - as in the state government, the federal government and local council - we all want rehab to change people's lives, but I've been surprised at how council have gone about it, they haven't supported my efforts, they've done their own thing," Mr Saunders said.

In a statement released following the announcement, Dubbo mayor Ben Shields stated that it was not the role of council to fund such projects, but to lobby governments for support.

"All said and done, it has required a massive investment from the community, Council, the Australian Government, and NSW Government to make this happen," Mr Shields said.

"The only people who can truly claim today as a 'victory' are those most vulnerable in our community."

"Today represents community and all layers of government coming together to respond to a critical need."

A final location for the facility has yet to be determined, but Mr Perrottet insisted that consultation locally will determine where the facility will be best placed.