Westfield and Hammerson's £1bn redevelopment plans for the Whitgift Centre have been unanimously approved by the council's strategic planning committee.
The scheme, which was first announced in January, has been earmarked as the catalyst for a massive economic boost to Croydon's economy.
The redevelopment will see both the Whitgift Centre and Centrale replaced with 1.4 million sq ft of shops and leisure facilities, as well as between 400 and 600 new homes.
Tonight's approval by the planning committee is subject to subsequent approval from Mayor of London Boris Johnson and Communities Secretary Eric Pickles.
Speaking after the announcement at the beginning of the year Mr Johnson said he was "overjoyed two illustrious retail giants had come together in this way."
The rival developers had been in deadlock over the redevelopment of the town centre, before agreeing on the 50/50 joint venture named The Croydon Partnership, which will create an estimated 5,000 new jobs.
Ahead of the unanimous vote in favour of the redevelopment a number of councillors said tonight's meeting would be a historic night in Croydon's future and that the development was a "once in a generation opportunity for Croydon."
Council leader Mike Fisher said: "This is very good news for Croydon. This will put Croydon back in the premier league of retail destinations.
"With 5,000 direct new jobs being created and 400 to 600 new homes, it is really good news, all they need to do now is get on with it."
Labour leader Tony Newman called the decision a "historic night for Croydon."
He added: "The challenge now is to make sure we do not only deliver the jobs but the sustainable transport and housing policies that people want to see with this.
"We have to make sure that this scheme truly benefits all the people in Croydon."
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