At the Development Control Committee meeting, members voted in favour of demolishing the building to make way for a new university style campus.
Although members were able to debate and vote on plans, the decision cannot be formalised until the council has heard from the Secretary of State for Levelling Up, Housing and Communities.
Earlier this year a request was submitted to the Secretary of State to consider whether the application should be determined by their department.
If given the final seal of approval by the Secretary of State, the Hippodrome site along with land that once accommodated the Plaza Cinema as well as the former JBs nightclub and martial arts centre would be used to create the new higher education facility.
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Earlier this year it was confirmed a bid for £25million to the government’s Town Fund to finance the project had been successful.
The bid has been drawn up by the Towns Fund Board – a partnership between the council, Dudley College of Technology, University of Worcester, tourist attractions and other key organisations in Dudley.
The development will include a university style campus and will provide higher education courses for the health sector. It is expected the new facility would be up and running by Autumn of 2024.
Dudley College of Technology agreed to work alongside the council to develop the new facility, after building up a degree of expertise through the development of the Dudley Learning Quarter and the creation of the Black Country and Marches Institute of Technology. The teaching and learning that will take place will be driven by the University of Worcester.
Councillor Simon Phipps, cabinet member for regeneration and enterprise, said: "This project is moving in the right direction. We have the funding already confirmed and a recommendation by our planning committee to go ahead with demolition.
"We now just need to wait for a final decision from the Secretary of State before we can proceed.
"I understand the committee's recommendation will come as a blow to those who have campaigned for years to bring the Hippodrome back into use as a theatre. But we have to acknowledge that we have exhausted all realistic options and now is the time to draw a line under what’s gone before and look to the future.
"The university centre would mark the start of an exciting new chapter, complementing the £1billion regeneration taking place right now in our town centre."
