Shropshire Council has been awarded the money as part of round two of the government's Levelling Up fund.
Telford has also received a significant boost with £20m to re-model the Place Theatre in Oakengates, as well as boost college plans for the town-centre Station Quarter development.
Shropshire Council bids for funding for improvements to Oswestry, a new roundabout and bridge over the railway on the A49 at Craven Arms, and money for major improvements to the county's bus networks and Shrewsbury's park and ride, have not been included.
It is understood that a third round of funding will follow – where the bids could be revisited.
Shrewsbury & Atcham's Conservative MP, Daniel Kawczynski, said he was delighted at at the success of the Riverside bid, saying the project would bring major economic benefits for the town.
The Riverside plans have been years in the making – and are central to Shropshire Council's much-criticised decision to buy the town's shopping centres.
The plans would see the demolition of the Riverside Centre, as well as the nearby Raven Meadows multi-storey car park, bus station and Pride Hill Shopping Centre – which closed in 2021.
A new leisure site would replace it, with intentions for it to host a cinema, along with a new multi-agency base or 'Shirehall', a 'transport hub', up to two hotels, offices, and up to 270 homes.
A main feature of the plan is improving the public space, providing a destination for people to visit.
Estimates from the council say it could lead to another 750,000 people visiting every year, as well as creating 2,000 jobs.
It could also include a quayside running along the bank of the River Severn, as well as a new footbridge to replace the current one from Frankwell Car Park to Riverside.
The successful bid from the council also includes money for "improved transport links" into Shrewsbury Railway Station to "ensure the project benefits the entire area".
Mr Kawczynski said: "Cognisant how crucial Shrewsbury's town centre redevelopment is for our local economy my team and I have lobbied government hard over the last five months to support Shropshire Council's bid to secure £18 million to kick-start the re-development plans.
"The area around Riverside Shopping Centre has been in a very bad state and the economic loss of not having this prime real estate developed has been significant.
"Therefore I am obviously delighted with the news I have secured the £18 million asked for by Shropshire Council to help kickstart this re-development.
"Professor Mark Barrow, executive director at the council, believes such is the scale of this project that it could lead ultimately, with private sector capital, to an £800 million construction boom.
"This success is in addition to the £54 million I have secured for the North West Relief Road, and the £312 million I secured for hospital A&E modernisation, and the £40 million secured for River Severn Partnership which is working on a long term holistic solution to manage the river."