Health trust chiefs said the go-ahead meant the final hurdle of signing a contract with preferred bidder Carillion to deliver the UK’s first PF2 hospital was now just a few months off.

Sandwell and West Birmingham Hospitals NHS Trust chairman, Richard Samuda, said: “This is yet another exciting step in the decade long campaign to bring 21st century hospital care to local residents and create an environment that staff can be proud to work within.

“This is the last-but-one step, with the trust now able to proceed to try and sign a contract, with our preferred supplier. We aim to do that before January 2016.”

Carillion was left as the only bidder for the £430m deal when the rival Laing O’Rourke-Interserve consortium suddenly dropped out of the race in April.

It is hoped work will start early next year on a brownfield site in the heart of Smethwick with the aim of completing the 670 beds hospital in mid-2018.

The new hospital will boast a fifth floor winter garden for visitors and patients.

Carillion expects to invest £16m of equity in the project, which will be built by the firm at a capital cost of £297m.

Hard facilities management and life-cycle maintenance services will also be delivered by Carillion and these services are expected to generate around £140m of revenue over the life of the 30-year concession contract.