Approving the £400m Terminal 2 will effectively double the capacity of the ferry port.
But the terminal will only be built as and when market conditions require its construction.
Port of Dover chief executive Bob Goldfield said: “This is a great day for the port and its long-term future, for our local community and for the long-term resilience of the UK economy, all of which have been at the forefront of our minds during the development of this scheme.”
Terminal 2 will be ranked as the second biggest ferry terminal in Britain after Dover’s existing Eastern Docks terminal.
Director of port development, Mike Krayenbrink, who managed the master planning process, said: “The scale and detail of consultation that has been undertaken at all levels over the past few years has been unprecedented.
“It is a clear indication of how seriously we take our responsibility to develop the port both as a national asset and as a key part of the local community.”