The hospice will be transformed by the works which will start next year.
It is being funded largely by a £1 million donation from ex-Goodyear workers and it will see the design of the building in Compton Road West improved to bring staff together and make it easier to get around.
A new community administration hub, which allows the community nurses to be located in one area, rather than in different places throughout the hospice site, will be built as part of the plans.
The redevelopment – now approved by Wolverhampton Council planners – will also link circulation routes between the hall and the hospice accommodation.
The funding will protect listed buildings on the site, including Compton Hall and the adjoining former stable block, listed in November 1976 and given grade II status.
Claire Marshall, chief executive of Compton Hospice, said: “We are delighted that planning permission has been granted for the Compton Community Coordination Hub.
“This building will transform the way we deliver care allowing us to co-ordinate our services from one central point making it easier for patients, families, carers and healthcare professionals to access support from Compton.
"It has been a long held ambition to coordinate our services from a central point to create a more efficient and responsive service for our patients and their families.
“This is a costly exercise which would not have been possible was it not for the donation from Unite members.”
The £1m donation was given by the Goodyear workers 5/344 Transport and General Workers Sick and Distress Fund. Wolverhampton’s Goodyear plant shut for good at the end of August this year.
One of the units will be named the 5/344 Transport & General Workers Union branch building.
Cyril Barrett, chairman of the Unite branch at Goodyear, said: “This donation will enable former Goodyear workers to leave a lasting legacy to people in the city.”
Compton Hospice has been supporting patients facing a life-limiting illness, and their families, for 35 years.
It serves Wolverhampton, Dudley, Sandwell, Walsall, South Staffordshire and East Shropshire.