Councillors voted to approve the scheme after hearing that it was "fundamental to the future sustainable growth of the Borough of Hartlepool".
The authority will now commence a Compulsory Purchase Order (CPO) process after so far failing to reach agreement for the acquisition of land required for the scheme.
Councillor Mike Young, Leader of Hartlepool Borough Council and Vice-Chair of the authority's Planning Committee, said: "The granting of planning permission by the Planning Committee is an important milestone in the development of this important infrastructure scheme which will bring significant benefits to the Borough of Hartlepool.
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"The new junction and road will help to improve the quality of life and safety of residents in Elwick and the neighbouring community of Dalton Piercy, it will unlock land for much-needed new housing and it will relieve traffic congestion on the existing A689 and A179 roads.
"I still hope that agreement can be reached with landowners, but the authority is committed to proceeding with the CPO process should that ultimately prove not to be possible."
Councillor Paddy Brown, Chair of the Planning Committee, added: "The importance of this scheme is highlighted by the fact that permission already exists for numerous dwellings in the borough but that the number of homes that can be built is limited until the proposed road network improvement is complete and fully open to traffic.
"Approval of the new junction and road clears the way for homes to be built whilst alleviating pressure on the A689/A179."
