This approval means that work can begin on the £460 million project
It comes after the transport minister approved the scheme last year.
Construction is set to begin later this year, with National Highways focusing on ground clearance.
Works are expected to take three years.
Commenting on the news, Cotswolds MP Sir Geoffrey Clifton-Brown said: “After 15 years of continuous campaigning I am delighted to receive this news.
“The residents of Gloucestershire and motorists who regularly use the A417 should be warmly welcoming today’s news.”
Often referred to as the ‘missing link’ scheme, the upgrade will include the widening of the single-carriageway stretch between Birdlip and Cowley.
When complete this will mean there will be dual carriageway linking the M4 to the M5.
Traffic build up created by the single carriageway stretch has for many years had a knock on effect on the Cirencester area, with drivers using village roads as ‘rat runs’ to avoid heavy traffic and long delays.
As part of the works The Air Balloon pub – which closed on December 31 last year – will be demolished.