Australia will be demolishing and rebuilding the main stadium which hosted the 2000 Sydney Olympics.
The move is part of an A$2.3bn (£1.3bn; $1.8bn) project in New South Wales.
The state government voted on Thursday in favour of the controversial decision, local media outlets reported, citing government sources.
The government has long planned to redesign the stadium to better suit the local sports played there, but critics say the project will waste money.
The plan was first floated in 2015 by the New South Wales government, and lawmakers have bitterly debated over it for months.
It will see the ANZ Stadium, which is what the Olympic venue is currently known as, rebuilt in 2019 as a 75,000-seat stadium, possibly with a retractable roof.
Reports said it will be a "true rectangular" stadium, which would better suit popular local sports including rugby league and football.
Completed in 1999 for the following year's Summer Olympics, the stadium can currently be configured as a rectangle or an oval, allowing it to cater to a variety of sports and music performances.
The project will also see the Sydney Football Stadium knocked down and rebuilt from 2018 to 2019, and the reconstruction of a third venue, Parramatta Stadium, which has already been demolished.
Luke Foley, the state opposition leader, said he did not support the significant cost for "a couple of sporting stadiums" over funding areas such as health and education.
Photo copyright: AFP/GETTY IMAGES. Caption: The stadium was built for the Sydney Olympics in 2000