With phase one of the scheme already completed, offering protection for the city centre and Woodlesford, phase two offers a range of complementary measures to protect the Kirkstall Corridor which was badly hit by Storm Eva in 2015. It includes further measures up to and including the upper catchment of the River Aire.
The government confirmed its contribution figure of £65m, with Leeds City Council planning to proceed with a planning application and tenders to be presented shortly to deliver the scheme in full.
It will be carried out in two parts, and will get underway shortly.
Using the government funding supported by council and other financial support, works will begin next year to deliver an initial one-in-100-year level of protection. This will then be upgraded to the full one-in-200-year level with a further phase of work after the remainder of the funding has been secured.
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Leader of Leeds City Council Councillor Judith Blake, who announced the proposal, said: "While we are disappointed the government says it cannot offer us any additional funding at this point, having the £65 million funding confirmed is welcome and is very important as it means we can get on with the important thing for our communities, residents and businesses and that is getting spades in the ground and getting on with this work.
"Our ambition to deliver the full one-in-200-year level of protection remains absolute and unchanged. This is a pragmatic two-step solution which means we can proceed and start the process of delivering the level of protection against the rising threat of flood events such as we experienced with Storm Eva that we know as a city we need."
Adrian Gill, flood risk manager at the Environment Agency, added: "The Environment Agency wants to deliver the best possible flood scheme for Leeds and is working closely with Leeds City Council to make the most effective use of the funding available to us whilst exploring further options.
"We worked closely with the council on the first phase of the city's Flood Alleviation Scheme, which cost £50 million and protects 3,000 homes, 500 business and 300 acres of development land.
"Our officers have been working hard within the joint team alongside colleagues from Leeds City Council since Boxing Day 2015 and we support the two-step solution outlined by Councillor Blake. This will enable the level of protection provided to the city centre to be extended at pace to the Kirkstall Road area, whilst we continue to strive towards our ambition of providing a 1-in-200-year level of protection from the River Aire for the whole city."
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