A field hospital built at the site of the Principality Stadium is to be decommissioned and replaced with a new 400-bed facility next to the University Hospital of Wales, it has been confirmed.
Health minister Vaughan Gething announced £33 million of funding for the new inpatient facility on Monday, designed to manage any increase in Covid-19 cases this winter.
"This investment will help Cardiff and Vale University Health Board manage any potential increase in admissions caused by Covid-19 in what is likely to be a challenging winter for health and social care services," Mr Gething said.
"We know the winter can present greater difficulty for NHS staff, and with the virus more likely to spread in colder conditions we need to ensure we have the bed capacity to cope with increased demand."
The Principality Stadium was converted into a 1,500 bed field hospital - known as the Dragon's Heart Hospital - at the start of the pandemic and opened to patients at the end of April.
It had a maximum of 46 patients being cared for at one time and in June the site was placed on standby after coronavirus cases began to fall.
The Welsh Government says it will outline additional funding for other health boards to ensure enough bed capacity across the country later this month.
Len Richards, chief executive of Cardiff and Vale University Health Board, said: "We are pleased that the Welsh Government has announced this funding for a modular build surge inpatient facility on site at University Hospital of Wales.
"This is welcome news and will support our planning for increased capacity of up to 400 additional patients in response to the current modelling predictions and a second wave of Covid-19.
"The build will be aligned to the de-commissioning programme of the Dragon's Heart Hospital at the Principality Stadium which we will have vacated by the end of October and will enable the Welsh Rugby Union to start making their own plans at the stadium.
"As a health service we will take on board all of the learning from Dragon's Heart Hospital in terms of design and clinical requirements for a temporary surge hospital and work to the national modelling requirements."
It comes as Vaughan Gething warned the country has 'weeks' to act in the ongoing fight against coronavirus - or risk a second national lockdown.
Speaking at the Welsh Government's briefing on Monday, Vaughan Gething said the pattern of increasing Covid-19 cases in the country is "similar to the situation we faced in early February".
Experts have warned that "action should be taken now to prevent significant harm or another full lockdown," Mr Gething added.
A further 183 cases of covid-19 were reported in Wales on Monday, bringing the total number of confirmed cases in the country to 19,573.