"The goal of the Albanian Football Federation is... to give a dignified stadium for our team, our institution [federation], Albania and the Albanian fans," football federation president Armando Duka told Reuters.
The 30,000 seat stadium will be the country's largest ever sports investment.
Albania's current main stadium in the capital Tirana dates back to 1938 when Italian experts started construction. It was finished after World War Two.
Although centrally located off of the main boulevard, the aged facilities have prompted complaints from foreign teams, including about a lack of hot water in showers.
Last year the lights went out during a friendly match between Spain's Real Madrid and an Albanian team, forcing stars such as Real Madrid's Kaka and Cristiano Ronaldo to wait in the dark.
Duka, who is also a vice chairman of UEFA's national associations committee, said the decision to build a stadium meeting both FIFA and UEFA requirements for international matches came after both football bodies had long tolerated sub European-level infrastructure and urged Albania to upgrade.
"It will be an elite stadium," Duka said in an interview. "It will meet all the requirements established by UEFA and is adequate for every kind of international match."
UEFA President Michel Platini has visited Albania to help push forward the stadium project.
Duka said the Albanian government will create a holding company, owned 70 percent by the Albanian Football Federation and 30 percent by the government, to start work to build the stadium which will include a retail area.
"I believe that by the end of the year we shall start the construction of the new stadium after carrying out all the procedures and tearing down the old one," Duka said.
Duka said the estimated cost was around 60 million euros. Construction will be financed by the federation and UEFA as well as the Albanian government.
"For the rest, since this investment is viable and will return its money, we shall ask for financing from financial organisations," said Duka, one of Albania's most successful businessmen.
"We guarantee 30 percent ourselves and 70 percent we shall guarantee with financing."
The new stadium is expected to open in late 2013.
