The £600 million project to transform Birmingham’s New Street Station has been approved – with council bosses hailing it as the most important project in the city for generations.

Planners at the council yesterday approved the landmark scheme, which will turn the dated station into a world-class gateway for the city. Work is now expected to start on site later this year.

The overhaul will include the demolition of eyesore tower block Stephenson Tower and alterations to the adjoining Pallasades Shopping Centre. Birmingham council leader Councillor Mike Whitby today said it was a “disgrace” the second city had gone so long without a first-class station.

“It has been a long road in securing funding for the Gateway scheme but ultimately our vision for a stunning central station that can cope with Birmingham’s 21st century transport demands has been recognised,” he said.

“The endorsement sees a further green light given to one of the most important projects undertaken in this city in generations.

“The redeveloped New Street Gateway will provide a focal point for far wider regeneration of the entire city over the next 10 to 15 years and is one of the main components of the city’s £6 billion worth of publicly funded regeneration projects currently on our books.

“Delivering a world-class station to the city will enhance our international reputation and investment potential while improving services nationally and regionally.”

When completed in 2015, the revamped station will double passenger capacity and feature a concourse that is three-and-a-half times bigger and enclosed by a giant, light-filled atrium. It is claimed it could create 10,000 jobs and will bring economic benefits worth a total of £2.3 billion to the region.

Jo Kaye, route director for Network Rail, said: “New Street station will be transformed into a 21st century transport hub. With the backing of the planning authority we are one step closer to realising this vision.”

Phase one will see a concourse built on a former car park next to the station which is expected to open in 2012. Phase two will see the existing concourse closed for redevelopment. The project is expected to complete in 2015.