The news - though expected - is a boost for Prime Minister David Cameron, who has made wooing the pharmaceuticals industry a priority in the wake of Pfizer's
GSK had said on previous occasions it aimed to invest some 500 million pounds and bring more jobs to Britain in response to government plans to cut the level of corporation tax applied to income from patents - a move known as a patent box.
The confirmation of its investment, which will create up to 1,000 jobs, comes the day after finance minister George Osborne's budget in which he laid out business-friendly tax plans, including reiterating the patent box plan.
GSK said its new biopharmaceutical factory would be built in Ulverston, northern England, at a cost of 350 million pounds, with construction expected to start in 2014 or 2015. The firm had looked at four possible sites in England and Scotland.
At the same time GSK will invest more than 100 million pounds in its two manufacturing sites in Scotland and the company is considering further investment at Ulverston which could double the total spend there to some 700 million pounds.
Any further investment will depend on continued improvements in the environment for innovation, GSK said - a clear sign it intends to continue to put pressure on the government to make Britain a favourable place to do business.
In recent years the drugs industry has tended to put manufacturing in low-tax countries like Ireland and Singapore. But introduction of the patent box has tipped the balance back, making Britain a viable choice once again.
The Ulverston facility will be GSK's first new British factory for almost 40 years.
The introduction of the patent box has transformed the way in which we view the UK as a location for new investments, ensuring that the medicines of the future will not only be discovered, but can also continue to be made here in Britain, said GSK Chief Executive Andrew Witty.
The British economy has been particularly reliant on pharmaceutical firms for success in manufacturing, but the industry has been under pressure recently as a wave of patents have expired, forcing it to make cuts.
In addition to the closure of Pfizer's Sandwich operation, which will cost around 1,500 jobs, GSK's British rival AstraZeneca
($1=0.6310 British pounds)
(Editing by Mike Nesbit)