Mayor of London Boris Johnson launched the start of preparatory building works in the oil tanks of the former power station at Bankside this morning.
The extension will add a further 5,000sqm of gallery space to the iconic London venue, doubling the size of the existing building and boosting its available event space.
Five million people a year now visit the gallery, which was originally designed for two million.
The venue's restaurant, East Room and Members Room are all popular spaces with corporate event organisers.
The project is expected to be completed in time for the London Olympic and Paralympic Games in 2012.
"The new Tate Modern development will be an iconic, world-class addition to London's skyline," said Tate director Nicholas Serota.
"We are delighted that the Mayor of London has taken with us the first steps towards its realisation. We look forward to creating one of the most exciting cultural buildings in Europe, which will bring direct benefits to Southwark and London as a whole."
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