The outdated University Station, in Edgbaston, would be rebuilt in time to open for the Birmingham games in two years time.
The nearby University of Birmingham is hosting hockey and squash competitions as part of the games.
University Station in Edgbaston is used by 3.3 million passengers a year vastly more than the 400,000 it was designed for in the 1970s.
But the revamped station, used by staff and visitors to Queen Elizabeth Hospital and Birmingham Women's Hospital, will be able to accommodate 7m people a year.
Birmingham City Council's planning committee gave its approval to the scheme at a meeting on Thursday.
A new station building and footbridge will be created with improved facilities for cyclists and pedestrians.
Upgraded amenities and improved platforms and waiting rooms are also part of the plans.
A large public space on the approach to the station is also included in the new proposals, with planners stating: “A new station building would be located either side of the Cross-City railway line, linked together by a pedestrian footbridge which would provide access to the main station building facilities and platforms 1 and 2.
“Access to the station building would be taken from a new station approach and forecourt located on Vincent Drive, and a direct access from the University of Birmingham Edgbaston Campus via a new footbridge over the Worcester and Birmingham Canal.
“Direct access would also be provided directly from the canal towpath.”
West Midlands Mayor Andy Street, speaking after the plans were given the go-ahead, said that development of the site ‘can not come soon enough’.
“For the many thousands of people who regularly use the station this redevelopment cannot come soon enough,” he said.
“We have worked closely with our project partners to develop plans of which we are all proud of and it is fantastic that the city’s planning committee has backed our vision.
“The new station will act as a fitting and welcoming gateway to the world class University of Birmingham campus and the Queen Elizabeth Hospital.
“It is yet another example of the unprecedented investment in our transport system which will support our economic recovery as we bounce back from the coronavirus pandemic.”