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Although the practice is not illegal in Switzerland, the conditions for permitting an assisted suicide remain very strict.
It is usually only permitted for patients who are mentally competent and suffering from an incurable disease.
According to a spokesman for the University hospital in Lausanne, the decision was taken after a long reflection.
Apparently from the start of 2006 terminally ill patients in Lausanne's main hospital will be allowed to take their own lives on hospital premises, as long as they are of sound mind, are already too ill to return home, and have expressed a persistent wish to die.
Up until now, hospitals across Switzerland had refused to allow assisted suicide on site and have denied access to the Swiss voluntary euthanasia society, Exit.
This meant that patients wishing to die by assisted suicide had to leave hospital to do so.
The new ruling will now give patients access to an external doctor or to a member of Exit.
Hospital staff will not be forced to compromise their beliefs and can choose whether or not they wish to attend the death.
It seems that the decision by senior doctors at Lausanne's hospital was taken after almost three years of consideration and reflects the position of the Swiss Medical Association and the National Committee on Ethics.
Both bodies agree that in order to respect the wishes and independence of patients, assisted suicide should be permitted in exceptional cases, but that it should never become a routine procedure.