The extension will create a spur from Kennington serving new stations at Nine Elms and Battersea and is expected to act as a catalyst for jobs, investment and regeneration in the Nine Elms area.
In his Autumn Statement to MPs, Chancellor George Osborne said the Government would support funding for the scheme.
Last year the Government said it would consider allowing City Hall, Lambeth and Wandsworth councils to borrow against Community Infrastructure Levy (CIL) revenues to support the scheme.
Today’s approval allows the Greater London Authority to borrow up to £1bn from the Public Works Loan Board, rejected by the Mayor last July as a funding source for Crossrail after the Government increased its lending costs.
City Hall says officials from the Mayor’s Office and TfL will now work with Government to finalise the details of the loan.
The Mayor said he was “delighted that after months of intensive discussions and hard work we have got the go ahead from Government on financing an extension to the Northern Line”.
Mr Johnson said today’s announcement would be “an incredible confidence boost for developers preparing to invest there and it will also be a considerable boost for local people who will benefit from the new Tube link.”
