The Museum, paid for largely by the Heritage Lottery Fund, and the first of its kind in the country, will be located at Deepdale and is expected to open next year.
Preston originally intended opening a club museum, but extended their plans to create a national centre. It will house football memorabilia from all over the world, the centrepiece being the Fifa Museum Collection, built up by Harry Langton. The project will cost an estimated pounds 7m, the Heritage Lottery Fund providing a pounds 5.7m grant and the remainder coming from national and local businesses.
"Preston occupies a special place in the history of football," Bryan Gray, Preston's chairman, said. "The club was one of the 12 founder members of the Football League in 1888 and Deepdale is the oldest ground in the Football League.
"England is widely recognised as the birthplace of football. The Football Museum will combine the passion for our national sport with a unique collection representing every aspect, from fine art to fanzines."
Keith Cooper, Fifa's director of communications, said: "We have been pleased to back Preston's persistent efforts to realise a project which is really long overdue in England."
Tom Finney, Preston's president whose own place in football history is secure, was enthusiastic. "It is fantastic to have got the funding," he said. "To have the Fifa Collection is a feather in our cap."