The Isle of Harris Distillery is to be built at Tarbert, after being awarded the funding the food processing, marketing and co-operation grant scheme. Work is due to begin on the distillery in late 2013 and it is expected to create around 20 jobs.

Since Christmas, the Wemyss family, owner of Wemyss Malts, announced it is to build a single malt whisky distillery and visitor centre, also on the back of a grant from the Scottish government.

Independent investment is also being sought for a £2.5-million new whisky and gin distillery, the Lakes Distillery, which is to be built in Cumbria and opened at the back end of 2013 – and will be headed up by Paul Currie, who set up the Isle of Arran distillery in the 1990s.

Rural affairs secretary Richard Lochhead said: "Whisky is an iconic Scottish product, which is loved around the world and has growing international sales. Already many rural and island communities around Scotland have reaped the economic benefits that a distillery can bring.

"I'm pleased that the Scottish government has been able to offer funding, amounting to over a third of the total costs of building the Isle of Harris Distillery, and it's great to be here today to learn more about this exciting project.

"I am sure that, in time, Harris whisky will develop a worldwide reputation for quality in the same way as Harris Tweed. I look forward to enjoying a Harris dram in a few years' time."

Chairman and distillery founder Anderson Bakewell said: "We are absolutely delighted by this recognition from the Scottish government of the long-term benefits the distillery would bring to the people of Harris. The award adds to the momentum which this project has generated and increases significantly the likelihood that this once-in-a-generation opportunity will not be squandered. Everyone in the islands can look forward with real excitement to the prospect of an initiative that promotes the assets of the islands throughout the world and serves as a catalyst for economic development locally."