The preschool applied for the funding through the 2020 NSW Start Strong Capital Works program in September last year and was informed it had been successful in December.
Outgoing preschool committee president Stacy Warren said the money was a real boost for the project.
“We were so thrilled to get this funding,” she said.
“We had applied for this money in the last round, but we were unsuccessful. So to be able to keep trying and then to be told we would get the funding was fantastic.”
And while construction of the preschool is estimated to cost more than $7.2 million and is dependant on successful federal funding, Ms Warren said this was a good start.
“We have until March to get that application together and Murray River Council seem fairly positive about it, but we will wait and see,” she said.
“We are so thankful for the help and support we have received from council, they have been a huge help.”
Murray River Council Mayor Chris Bilkey said council was also thrilled with the news.
“This is fantastic news for the Moama and District Preschool,” he said.
“We need to move the preschool from the existing site as it's going to be on a much busier street than it's currently on once the Francis St and Cobb Hwy works are complete.
“The existing preschool has outlived its footprint there and will become a more dangerous place for families and their children.”
At council’s meeting on August 25 last year, councillors approved an amendment to the Local Environment Plan to permit the construction of a child-care centre on the corner of Lignum Lane and Boyes St.
Cr Bilkey said the site near the Moama Recreation Reserve was "ideal" for the new facility.
“It's going to add to the already established education precinct and help it continue to grow,” he said.
“And this new facility will be of a size that will allow the preschool itself to grow in the future.”
By making the move, the preschool is looking to double in size by building a four-room building, with a goal to offer programs for three-year-olds, young four-year-olds and prior-to-school age.
The committee is waiting on federal funding before building plans can go ahead.