Joint venture design and build contractors Laing O’Rourke and Ferrovial Agroman can now start construction in spring next year to open by 2020.
During construction the project will support around 1000 jobs.
The extension of London Underground’s Northern line will see two new stations built – one at the heart of the Battersea Power Station redevelopment and another at Nine Elms.
Other transport investments in the area, include the transformation of the Vauxhall gyratory, the creation of new dedicated cycle routes through the area, and the upgrading of Vauxhall Tube station to include the provision of step free access.
The full cost of the Northern line extension is expected to be up to £1bn, which is being funded entirely through contributions from the developments in the area that will benefit from the extension.
An innovative funding package has been agreed between the Mayor of London and Government, which includes the creation of an Enterprise Zone from 2016 for a period of 25 years.
Mike Brown MVO, Managing Director of London Underground, said: “This vital new part of the Underground network will support and enable growth in an area that is rapidly developing.
“By 2020 we will have created over three miles of new tunnels and two brand new stations that will transform transport links to the area.”