The revamped premises, courtesy of the high-profile pub chain JD Wetherspoon – which has 702 pubs across the UK – is expected to create 40 new full and part time jobs when it opens for business in late February next year.
The New Street development, which will be called The Weeping Ash has been welcomed by St Neots Town Council.
Town centre manager Tom McCormick said: "The significant investment is certainly welcome into the town, especially in the current economic climate across the UK.
"It adds to the variety of choice of places to eat and drink in the town centre. "The full and part time job prospects is very good news indeed for St Neots, especially as we would expect them to be taken up by local people."
Mr McCormick said he would be more than happy to meet up with Wetherspoon management once the concern is up and running.
Deputy mayor Cllr Alan Cummings said the Wetherspoon pub would give an additional boost to the town and warmly welcomed the new jobs.
The Weeping Ash will specialise in cask-conditioned beers, including those from regional brewers.
A Wetherspoon spokesman said that the popular pub chain had been keen to open a pub in St Neots for quite some time.
He said: "The Weeping Ash will be wheelchair accessible and have a specially adapted toilet for customers with disabilities. Of course food will be served all day." The spokesman added: "We are very pleased that building work has now started."
>> Since its first opening in 1979, Wetherspoon has specialised in converting a wide array of buildings into pubs, such as former banks, car showrooms, cinemas, theatres and even a funeral parlour.
The pubs are always given a name that is significant to the area it is established in.
How it has been named
The soon-to-be-converted old Post Office stands on what was once a much admired Victorian garden which belonged to the house across the road (now the Conservative Club) and belonged to bank manager and town commissioner, William Medland, who died in 1872.
The Medland garden was well known for its many fine trees and shrubs and especially for its magnificent weeping ash.
Other names considered for the new St Neots pub, were John Shaw after an early 20th century postmaster; Saxon Monk because the Post Office is situated on what was the eastern boundary of St Neots Priory and Prior John, the last prior of St Neots Priory in 1534.
