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 2011 decision to shutter its giant research centre in Sandwich, southern England.
GSK had said on previous occasions it aimed to invest some £500m 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 £100m 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 £700m.
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.