"This is a pivotal moment in the history of this great club," chairman Graham Simpson told the club's official website.
"This will now enable us to look forward to a new era of life at Vicarage Road, and push on towards our goal of redeveloping the east stand.
"The positive decision is to be applauded and I think it's just reward for the hard work and efforts of Mark Ashton, our CEO, and his team of dedicated staff.
"It's a tribute to how well Watford Borough Council, Watford Football Club and Origin Group have worked together that this innovative multi-solution scheme can now become reality.
"It will provide much needed accommodation with great views for workers from the nearby hospital and give first-time buyers a chance to get a home of their own.
"Not only that, but it will provide the club and its fans with much improved facilities, and will be a landmark scheme that contributes to Watford's skyline and the rejuvenation of west Watford."