The Financial Services Authority has cleared Spanish bank Santander Central Hispano's £9bn($16.6bn) takeover of Abbey National.
The deal will create the world's eighth largest bank
The move was widely expected after the FSA said last month that it saw no "material impediments" to the deal.
The deal, which will create one of the world's ten largest banks by market value, has already been approved by shareholders of both banks.
The deal is expected to be completed on 12 November.
Abbey is facing a legal challenge to the deal from one of its private shareholders who has claimed it overlooked the views of invetors at the extraordinary general meeting at which the deal was ratified.
Michael Johnson's application to the High Court has been adjourned to 8 November, the date already scheduled for the courts to approve the deal.
Abbey has rejected accusations that the meeting, held on 14, October, was not conducted legally.