Transport Secretary Patrick McLoughlin approved a Transport and Works Act order allowing the project to proceed after accepting proposed measures to protect bats which use Wolvercote Tunnel in Oxford as a roost.
The line will be the first new rail link between London and a major British city for 100 years.
Bicester Town station will be rebuilt as part of Chiltern Railways’ Evergreen 3 project linking Oxford and London. A new station will also be built next to the Water Eaton park-and-ride centre in north Oxford
The route, from London’s Marylebone station, will follow the existing line to Birmingham before branching west on to half a mile of new track that will link it to a rarely used line between Bicester and Oxford.
The project will upgrade 10 miles of dilapidated track on that line and see the building of two stations – the replacement of one at Bicester and a new one in north Oxford.
Graham Cross, Chiltern Railways’ business development director, said it had taken more than two years to get planning approval.
He said: “We’re pleased to have been granted the power to proceed with this significant railway investment, which will benefit thousands of commuters and businesses in Oxfordshire.”