The wellness and life science village in Llanelli was backed by Carmarthenshire councillors in January but had to be referred to ministers.
The Welsh Government has now told the council the application did not raise “novel planning issues”.
The scheme is the second biggest of the 11 city deal projects being taken forward in the Swansea Bay City Region.
To be built over five years, the village at Delta Lakes is predicted to create up to 2,000 jobs in health, leisure and research facilities, along with assisted living accommodation.
‘Much needed investment’
In a letter seen by the Local Democracy Reporting Service, the Welsh Government told the council it had considered a number of issues, but said: “It is now for your authority to determine the application as it sees fit.”
Councillor Rob James, who leads the Labour opposition group in Carmarthenshire, said: “We are extremely pleased that the stop notice for the city deal project has been lifted after our discussions with the Welsh Government.
“Throughout this process Welsh Labour councillors have been keen to ensure that public money is being spent appropriately, whilst supporting this much needed investment in the region.”
He said it was now a priority to get the business case for the project signed off by the UK and Welsh Governments, with £40m of public funding available.
The private sector is expected to cover £127m of the cost, with the council also contributing.
The wellness village has been hit by the suspension of Swansea University employees believed to be linked to its role in the project, and the council’s decision to drop a private sector development partner.
However, the authority’s Plaid Cymru leader, Emlyn Dole, has been adamant the scheme will be finished on time, with the first phased to be completed in 2021.
Council leaders have been asked to comment.