Plans to train doctors at the Magee campus of Ulster University have been beset by delays and funding problems.
More than £200 million in new funding announced on Monday has been allocated to projects in the North West.
Foyle MP Colum Eastwood said the funding meant the school can now proceed.
“This now needs to be followed up with the green light given for the medical school,” the SDLP leader told BBC Radio Foyle.
“I don’t see there being much of a problem there, or at least there shouldn’t be.”
The medical school project requires final sign off by Stormont’s Health Minister Robin Swann.
Foyle Sinn Féin assembly member Martina Anderson said it would now come as a “shock” if the school was not signed off.
The need for a medical school in Derry had been brought into sharp focus by the Coronavirus pandemic, she said.
“When you consider 500 doctors had to be called out of retirement, that shows the need now more than ever to train doctors in the North West.”
In May 2019, the UK government announced £100 million for the Derry and Strabane so-called city deal.
The bulk of that and the match funding from Stormont announced on Monday has been earmarked for Ulster University’s expansion in the North West including the medical school.
Further projects include Ulster University’s centres of innovation and excellence in data analytics, robotics and automation.