The development is a partnership between Oxford University Hospitals and Ronald McDonald House Charities, which provides free rooms to families with hospitalised children.
The charity already provides 17 bedrooms in the Oxford Children’s Hospital for parents and families. The new 60-room development would extend services to include Newborn Intensive Care.
The building will be constructed in the hospital grounds next to Woodlands Road.
Funding of around £9m will now need to be raised over the next couple of years before the expansion and relocation of the Oxford Ronald McDonald House can move to the next stage, said Oxford University Hospitals.