The funding will assist ten projects after the allocation process was opened up for groups in all parts of the council area to make their case for a share of the Town Centre Capital Grant Fund.
The council's Community and Enterprise Committee approved the selection of the 10 projects that were successful from the 26 who had applied, and agreed the recommendations of the amounts to be granted to each.
The Committee Chair, Councillor John Anderson, said: "We had a tremendous response to this from groups right across South Lanarkshire, and there was a huge amount of thought and creativity put into the bids.
"Inevitably, some will be disappointed, but it may well be that there are other ways some of them can be helped. There was a finite amount of money and the officers put a great deal of work into a very organised process to determine the ten successful projects, and we are excited about the way that these will make a really positive impact on communities in a range of areas."
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The successful projects will share a fund of £2,506,000 from a Scotland-wide fund of £50m that was allocated to invest in town centres.
In South Lanarkshire, the projects were judged not only on the improvement they would make to their respective town centres, but also on factors such as the ability to deliver them in the set timescale, the value for money and the ongoing impact of the project once completed.
The projects that will be undertaken in Hamilton and will see the former Hamilton Advertiser building developed into social housing, a residential and commercial development at the Vogue Cinema and the Poundstretcher site seeing a derelict building replaced with commercial units and social rented housing.
East Kilbride will see space for 60 business start-ups created in the Plaza Tower while Cambuslang town centre will be transformed with streetscape improvements.
In Cambuslang, improvements to the physical environment of the town are set to take place. This will be done in stages, with phase one being supported by the Town Centre Capital Grand Fund and further funding opportunities being explored for future phases.
Lanark will host two projects, with the Royal Oak being demolished and rebuilt for commercial and social rented housing use, and the demolition of a building at Hunters Close to improve space for parking and enhance the ability to hold events through improved access.
A Rainforest Café and Cinema will be created in Forth to enable town centre events and increase footfall and, in Carnwath, an enterprise hub will be created on the site of the "old garage and school".
Across South Lanarkshire, plans for four heritage trails – in Bothwell, Stonehouse, Douglas and Strathaven town centres – will be combined in a single project.
As well as the successful projects, others were classed as "reserve projects" and will be used as substitutes if any of the successful ones are unable to deliver on timescale or cost. The full report was agreed at a meeting of the Community and Enterprise Resources Committee.
