The £45 million venue, which will be called the Dunard Centre, will seat 1,000 people for concerts and events in the heart of St Andrew Square and is the flagship cultural project of the City Region Deal.

Planning approval was agreed by the council’s development management sub committee yesterday after council planning officials recommended the project for approval.

The plans, which were put forward by IMPACT Scotland, will receive £20 million of capital funding from the City Region Deal Committee.

Welcoming the decision, Sir Ewan Brown, chairman of IMPACT Scotland, said: “Today’s decision is tremendous news for the City and turns the ambition for a world-class centre for music and performance, into a reality.

“I am particularly pleased to announce today that the official name of the venue will be Dunard Centre supported by Royal Bank of Scotland, this is in recognition of the huge contribution Carol Grigor has made to this project through the charitable trust Dunard Fund.

“We now have the opportunity to create an exciting new venue for everyone, in a building to be proud of.”

Speaking during the committee hearing, architect Sir David Chipperfield said: “This will be a public building that relates to Edinburgh on a civic scale by both fitting in and standing out in order to perform an important social and cultural role in a city with strong established cultural traditions.”

Council leader and chair of the Edinburgh and South East of Scotland City Region Deal Joint Committee, Adam McVey, said: “The city region deal has given us the first opportunity for more than 100 years to create a new concert hall in Edinburgh! It’s a hugely exciting time and now that the designs have planning permission, the project can move forward.

“The creation of the Dunard Centre will provide an excellent new venue and home for the Scottish Chamber Orchestra and another exiting development on St Andrew Square. None of it would be possible without our ambitious city deal or the generosity of philanthropists like Carol Grigor. Together, we’re opening up an exciting new chapter in Edinburgh’s already thriving cultural scene to help more of our residents to take part in and enjoy the arts.”

The Architectural Heritage Society of Scotland (AHSS) lodged a formal objection to the plans and called for the venue to be reduced in scale. It argued that the building would “tower above” its New Town neighbour and “detract from the historic building’s character, greatly diminishing its special interest and status as the focal point of the east end of Edinburgh’s New Town plan”.

The owners of the new St James Centre, which is currently under construction, also raised fears over traffic and deliveries.