Supporters of the scheme - dubbed the 'Golden Banana' - will breathe a sigh of relief that the designs have received the green light at last.
But they will now have to wait to see if the Uruguayan designer's proposal is to be called in by the Government Office for the South East.
If the project does go ahead it will see the construction of the gallery, which is aimed to mirror the Bilbao effect by triggering regeneration in the town.
Council bosses have backed the scheme since its inception. Council leader John Jowers said he was delighted with the decision. 'This is fantastic news which moves the project a step nearer to becoming a reality, creating a unique opportunity to raise Colchester's profile,' he said.
'The visual arts facility is a key element in the regeneration plans for the St Botolph's area which will provide a larger choice of unique historic, cultural and retail experiences,' he added.