The bulk of emergency surgery is to be moved from Birmingham's City Hospital to Sandwell Hospital.
Patients needing emergency surgery will be transferred to Sandwell
Health Secretary Alan Johnson backed the Sandwell and West Birmingham NHS Trust plans after a review.
Senior doctors, Birmingham City Council and members of the public had raised concerns about patient safety during a consultation period.
The trust said it was pleased the plans were approved and that the changes were needed to provide "high quality" care.
While emergency surgery is carried out at Sandwell, the majority of inpatient surgery will be carried out at the City Hospital.
'Lot of work'
An independent report by the Independent Reconfiguration Panel said the trust should ensure that its plans for a new hospital go ahead "as rapidly as possible".
It added that provision of immediate emergency surgery at night time must remain at City Hospital.
The report also said the trust must ensure that ample transport facilities are available to transfer patients and relatives from City Hospital to Sandwell.
A trust spokesperson said: "In developing our plans we have always tried to balance maximum local access, including keeping both our A&E departments open, with the provision of safe, high quality services.
"We are pleased that the IRP, having considered all the evidence, has advised the secretary of state that we should go ahead with our plans subject to the implementation of additional measures.
"We realise there is still a lot of work we need to do before we can implement the changes and we will work with our clinicians to complete this."