The transformation of the site began yesterday with work beginning on the extension and refurbishment of the multi-storey car park to increase its capacity from 450 to more than 800 long stay spaces.
The project is part of the £120 million Wolverhampton Interchange scheme, which aims to improve the city centre's transport links and make it more welcoming to visitors, shoppers and businesses.
The redevelopment is being carried out by Neptune Developments and Balfour Beatty on behalf of the Wolverhampton Interchange Partnership, and is expected to be completed by Christmas.
Once completed, it will pave the way for the new state-of-the-art railway station to be built and the Metro line extension, which will include a new stop at the station.
A total of £40m of funding is in place for the railway car park extension, new train station, and Metro extension.
Deputy council leader, Councillor Peter Bilson, said: "As well as encouraging more investment and boosting prosperity in the city, the Interchange will become the gateway to the city for people arriving off the national rail network, by bus or Metro.
"Wolverhampton is one of the busiest railway stations in the Midlands, with Birmingham just a 17 minute journey away, Manchester 70 minutes and London 98 minutes.
"The start of works on the railway station car park is a major step forward and a very visible sign of this vital project becoming a reality and delivering the multi-million transport hub the city deserves."
The extension and improvement of the car park is being made possible by the demolition of the former steam mill at Corn Hill, allowing for a new entrance off Mill Street.
As well as more spaces at the car park, there will be a cycle and motorcycle area, a new taxi rank built and the creation of a brand new entrance off Mill Street.
The entrance will be relocated to Mill Street to make way for the tram extension and allow Railway Drive to become more pedestrianised.
Steve Parry, managing director of Neptune Developments, added: "The construction of the extended car park and the new station forecourt is important as it will facilitate the construction of a new station building with much enhanced facilities for passengers and railway employees."
The medium-term ambition is to build a new hotel on the land between Railway Drive and the car park.