Through the scheme being jointly funded by Gatwick Airport and Network Rail, the station will get a new platform to ease the ‘bottleneck’ for the Brighton services.
Other improvements include new escalators, a refurbished concourse area and new track and signals to provide passengers with more reliable and punctual journeys.
Construction work is due to start next autumn and is expected to be completed by the end of 2013.
Network Rail said great thought is being put into ensuring the construction works do not impact the safe operation of the station during passenger hours.
Work to finalise the design of the scheme will start immediately with the relocation of the substation due to commence in summer 2011.
Passengers will begin to see progress at the station but the major construction work is not scheduled to start on site until Autumn 2012 after the London 2012 Olympic and Paralympics games have finished.
The project is expected to be completed by the end of 2013.
Network Rail said the station in West Sussex was the busiest airport station in the UK last year.
Stewart Wingate, the airport’s chief executive, said: “We are investing close to £1bn between now and early 2013 to modernise the airport facilities for our passengers.
“I am pleased that the station – a critical gateway to our airport – will now be developed to match the improvements we are making to the airport itself.”