Southampton City Council awarded the Watermark WestQuay development outline planning permission at its Planning and Rights of Way meeting.
Watermark WestQuay, led by developer Hammerson, is planned for the former Pirelli site in the city and would see a public plaza, hotel, retail outlets, cinema and homes built.
Royston Smith, cabinet member for economic development said: "This is another important step towards a visionary new development that will truly be worth waiting for.
"Whilst times may be bleak, we will do all we can to move remarkable project forward until there is a new jewel in Southampton’s crown.
Cllr Smith said the plans were for a complex with the city's historic walls forming a backdrop for a new restaurant quarter and external shopping environment.
"This is the chance we have been waiting for to transform this site into one of the most exciting and attractive new mixed-use developments in the UK. I congratulate Hammerson for persisting with their exciting plans during these these difficult times.”