The house builder has now committed to transform the site into an 650-homes, mixed use development.
Manchester based HOW Planning secured full planning from Preston City Council.
A further decision by delegated consent is expected for a change of use and listed building consent for the redevelopment of St John’s Church.
The approval also paves the way for up to 9,000 sq m of offices, a primary school and sports and recreational facilities as well as new access and public realm improvements.
The former St John’s Church will also be converted to a community facility.
The former hospital, which is owned by the Homes and Communities Agency, is now derelict and has been brought forward for redevelopment by the HCA and partners Taylor Wimpey.
Gareth Owen, regional land director for Taylor Wimpey North West, said: “We have been working closely with the HCA and all our advisers for a long time to ensure this development meets all expectations and ambitions for the area.
“This announcement enables us to progress with the scheme and ensure this major regeneration programme becomes a reality.”
Deborah McLaughlin, executive director North West at the HCA, added: “It is great news that the Whittingham Hospital scheme has been given the green light.
“I’m now looking forward to seeing work start on this important scheme that will bring new homes, improved community facilities, transport links, and open spaces to the area.”
The team involved with the Whittingham scheme include project managers Tec Projex; architects MPSL Planning & Design and MCK Associates; environmental consultants TEP; and engineers Lees Roxburgh.