The joint promoters for the scheme are Gallagher and the Homes & Communities Agency.
The decision to approve outline planning permission for the first phase of the new town - which will ultimately see 10,000 new homes built - means developers could begin work in 2013.
As well as new homes, a primary school, and shops, Gallagher's plans for the first phase also include a sports hub, areas of open space, a local centre, employment opportunities and a site for a household recycling centre.
The approval by councillors follows a public consultation in the summer and negotiations with developers, which now mean plans include a cycleway linking Northstowe and Bar Hill during phase one of the town. A network of cycleways and footpaths will also be built to give easy access for Northstowe residents to the guided busway and improvements to the Bar Hill junction of the A14 will be funded by the first phase.
The plans for the Bar Hill junction follow recent Government announcements committing £7.7m to widen the A14 between Girton and Histon in 2014 as a short term measure to alleviate congestion and improve safety, in advance of a major upgrade to the road.
Detailed plans containing information on exactly where the homes, roads and facilities will be built on the site, as well as how landscaping and drainage will be features of the development, will now begin to be developed. These are expected to be submitted on a regular basis throughout the next 12 months and council bosses have committed to consult with communities, and a parish forum set up for the town, every step of the way.