NI Social Development Minister Margaret Ritchie marked the launch at Newry's Ballybot House by inviting the contractors on site.
A proposed £1.3m three-storey extension will be added to the 25,000 square feet of office, retail and conference facilities.
Owned and managed by the Confederation of Community Groups, it is the Confederation of Community Groups headquarters and also houses approximately 20 voluntary and community sector tenants who have self contained offices.
Margaret Ritchie said: "This extension to an already invaluable resource centre is a welcome boost for the people of this area.
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"Through my Department's Modernisation Fund, community organisations can benefit financially to help meet the needs of vulnerable members of our society.
"I welcome the start of work on this project as it will further enhance community cohesion and participation," she said.
"By targeting resources in a way that has maximum impact, this extension work will add to a community hub which not only delivers the aims of the Modernisation Fund programme but demonstrates it in a practical way."
The Department for Social Development has provided funding of £1.3million to build the new three-story annex to Ballybot House.
The house was originally constructed as a linen mill having been built in 1865 by Robert Dempster, to capitalise on the expanding market for linen following the American Civil war and the loss of the Confederate cotton to the world market.
In 1906 Robert Kerr, the mill manager took over the mill and ran the business successfully until his death in 1921. The mill struggled on until 1927 when it eventually closed.
Funding from the Department's Modernisation Fund has now enabled the Confederation of Community Groups to start work on the new extension which will add to this existing resource.
(BMcC/GK)
