The link sits between Pinfold Street and the High Street, connecting WV Active Bilston-Bert Williams Leisure Centre and the wider Urban Village development to Bilston town centre.
Plans were submitted following consultation with the local community on the designs for the re-imagined open space, which will feature school age play areas, outdoor seating, flexible event space, social spaces and planting.
The council will now seek to appoint a contractor to deliver the scheme, with a view to works starting later this year.
It forms part of the transformative Bilston Health & Regeneration Programme (HaRP), supported by funding secured from UK Government.
Councillor Stephen Simkins, City of Wolverhampton Council Leader, said: “Now planning approval is in place our focus can turn to delivering the Bilston High Street Link improvements as part of our wider transformation for the town.
“We not only want to enhance this public space to create a better environment – but also make it a thriving space for activities, particularly for the young people of Bilston.
“It is important for our traditional local centres to flourish, and this scheme builds substantially on the steady pipeline of investment that is delivering for Bilston.”
Bilston High Street Link is temporarily occupied by market traders during market hours, while Bilston outdoor market undergoes major redevelopment.
The traders will return to the new-look outdoor market later this month with the first day of trading on July 2.
