Liverpool City Council gave the water company the go ahead to extend its Sandon Dock waste treatment plant into the redundant Wellington Dock.
Dredging of Wellington Dock has already started and work on the £200m-plus plant is scheduled to take four years to complete.
This new plant will continue the transformation of the River Mersey from the country’s most polluted river in 1985 to one which supports salmon and trout.
The huge plant will be capable of handling 11,000 litres of wastewater a second – the equivalent of re-fuelling the average family car 200 times every second.
Mark Walker, principal project manager, said: “The plans are great news for our customers across Liverpool.
“It means we can continue to provide one of the city’s most essential services for many years to come.”