The £240 million scheme will include new hospital facilities, green space and up to 700 new homes. It is expected to create around 1,600 jobs.
The Council had applied to the Government for disposal of council allotment land at Farm Terrace to be included within the campus development. It said that inclusion of the land was "essential" for the scheme in terms of economic viability and the wider public benefits the development will bring.
The DCLG said in a statement that Ministers were satisfied that the Council had met the "strict rules" that regulate the disposal of allotments and that the Council will be creating new allotments to replace those lost to enable the building of the new hospital facilities.
"This application, backed by the local council, local MP Richard Harrington and Watford’s Elected Mayor Dorothy Thornhill, opens the door for new NHS hospital facilities and regeneration scheme, as well as replacement allotments," said Stephen Williams MP. "Having carefully considered all the issues and representations, ministers have approved the application".
The DCLG said it publish guidance in the New Year to clarify the "strict conditions" under which councils can dispose of allotments.
