The ChristChurch Cathedral, destroyed in the 2011 earthquake, will be restored.
The decision was made on Saturday at a meeting of 220 members of the church's synod.
It will cost around $104 million.
- Government contribution: $10 million grant and a $15 million loan that won't need to be repaid if the loan conditions are met
- Great Christchurch Buildings Trust: $13.7 million
- Christchurch City Council: $10 million
- Anglican Church insurance payout: $42 million
The Government is expected to pass legislation that would allow the Anglican Church to fast-track the reinstatement.
Other options included knocking the existing structure down and rebuilding from scratch, or gifting the site to New Zealand, and letting the Government decide what to do next.
Reinstating the cathedral was the favoured option for Christchurch Mayor Lianne Dalziel.
"One wonders if the spirit has been nudging us towards reinstatement," said Bishop Matthews.
She says it could take at least a few years to reinstate the church.
Local MP Nicky Wagner said is was the "best possible outcome" for the city.
"For many years the Cathedral has sat broken and neglected, detracting from all the amazing work taking place in Christchurch.
"This decision gives the church, the community, businesses and tourism bodies the certainty they've been looking for."
She said getting on with restoring the cathedral would have "positive flow-on effects for the rest of the country".