Hamilton mayor Paula Southgate has welcomed the plans.
"Punishing people whose offending is driven by alcohol and drug dependency, without tackling the underlying issue, doesn't make sense to me," Mrs Southgate said.
"We need to break the cycle of offending and we have to find better, more cost-effective ways to change behaviour.
The AODT concept used elsewhere has seen a significant drop in reoffending rates and that's something I want for our city," Mrs Southgate said.
The Hamilton AODT court follows two pilot courts in Auckland and Waitakere which were established in 2012.
Mrs Southgate said there had been "sustained and comprehensive public support" for the concept of an AODT court in Hamilton from people working at the coal-face, the judiciary, researchers and recovering addicts.
"This is a good example of the region speaking with one voice to central government and getting something done. I look forward to more details on the funding announcement to come."
The Waikato Alcohol and Drug Court formation committee has welcomed the announcement.
"Hamilton and the Waikato region has seen a significant increase in drug and drug related crime, while the police, courts and corrections have been processing offenders, reoffending and offending on bail remains high amongst those with high needs and high-risk offenders," the committee said.
"The AODT Court seeks to support those who are committed to making fundamental life changes to break the cycle of addiction and offending.
"AODT court committee wants to acknowledge former Hamilton mayor Andrew King for his involvement, lobbying ministers, sponsoring papers to the mayoral forum, connecting the committee to funding and providing media commentary over the past 12 months, he has shown tremendous support to establishing an AODT court in Hamilton."
Hamilton based Labour MP Jamie Strange said, "We need to change the course of our criminal justice system to ensure less offending, less reoffending, and fewer victims of crime who are better supported. Thirty years of locking more people up for longer has not changed re-offending rates nor made communities safer."
"A number of local people and groups have been lobbying for a drug and alcohol court in Hamilton over the past 12-months; a sign on the growing growing support in our region.
"There is strong organisation on the ground — we are ready to roll this out in Hamilton."