Britishvolt has received an in principle offer of government funding though the Automotive Transformation Fund (ATF) to help deliver £1.7bn in private investment.
Once complete, the factory will produce enough batteries for over 300,000 electric vehicles each year.
It will also create around 3,000 direct high-skilled jobs and another 5,000 indirect roles in the wider UK supply chain.
Prime Minister Boris Johnson said: 'Backed by Government and private sector investment, this new battery factory will boost the production of electric vehicles in the UK, whilst levelling up opportunity and bringing thousands of new highly-skilled jobs to communities in our industrial heartlands.'
The move, which as been hailed as a 'vote of confidence' in the North East economy, has been welcomed by Northumberland County Council.
'This is a great day, not just for this part of Northumberland, but also the whole county and the wider region,' said council leader Glen Sanderson.
'We’ve said since the outset this scheme is a real game changer and to now have Government backing is very welcome news.'