The upgrade is needed to meet a forecast 40% rise in passengers in the next few years and forms part of a package of measures from Transport for London to upgrade links in the massive development district.
These includes projects to extend the Northern line, transform the gyratory and major improvements for walking and cycling.
David Waboso, Capital Programmes Director, London Underground, said: “Vauxhall is a very busy Tube station, with about 21m people using it annually, and is set to get busier.
“This upgrade will make the station step-free, will give passengers more space and will make journeys through the station quicker and more pleasant.
“The works, along with other TfL investment in improving the local transport network, will help support the regeneration of the area.”
Network Rail is also now completing the national rail station’s upgrade, which includes more lifts to improve accessibility, thus creating a fully accessible interchange between rail bus and Tube.
Work will start in 2014 on the Tube station and be completed in 2015.
The station ticket hall will be overhauled to raise passenger capacity, subways and stairways refurbished and a lift will be installed to make the station step-free.
Work is planned to be phased over three years and will present major logistical challenges as the station will remain in operation during the upgrade.
The government last month agreed a loan of up to £1bn to allow London Underground to fund the extension of the Northern line to the Battersea Power Station site.
The Northern line extension is subject to planning approval from the Secretary of State and once a funding package is in place then the construction of the extension could begin in 2015.
An application for a Transport and Works Act Order, which is required for infrastructure of this scale, is due to be finalised this spring.