The approval from the UK Secretary of State for Communities Eric Pickles will allow Urbaser Balfour Beatty (UBB) to start construction as soon as possible.
UBB was awarded the contract to design and construct the facility in February 2013.
However, Gloucestershire County Council’s planning committee rejected its planning permission in March 2013.
UBB appealed to Pickles, who resolved to allow the appeal and grant planning permission subject to conditions.
The new facility will divert more than 92% of household waste from 600,000 residents away from landfill.
It will be capable of treating about 190,000 tons of waste per year and generate enough energy for 26,000 homes.
The facility is expected to avoid 40,000 tons of carbon dioxide emissions and save local people over £150m in the next 25 years.
Gloucestershire County Council cabinet member for waste Ray Theodoulou said: "Today’s decision means the rubbish we can’t recycle can be disposed of in a safe and environmentally friendly way.
"Our aim is to reach 70 per cent recycling across the county and stop burying waste in the ground completely. As well as this new facility, Gloucestershire will also be using anaerobic digestion to treat food waste and recycling more. This all takes us a huge step closer."
Gloucestershire County Council planning committee chairman Nigel Moor said: "The committee robustly defended its decision to an independent inspector at the public inquiry last year. However, we acknowledge today’s announcement."
Image: UK Secretary of State for Communities Eric Pickles. Photo: Courtesy of Communities and Local Government Office.
