A new tier will be built around St James' Park, extending the existing Milburn Stand, North West Corner and Sir John Hall Stand and increasing the capacity of the ground from 36,800 to 51,000. The new stadium will be open for the start of the 2000/2001 season, but half the extra seating will be available a year earlier and capacity will not be cut during the building work.
Newcastle had originally planned to build a new stadium at Castle Leazes Park as part of a pounds 90m project but scrapped the idea due to an impending Public Enquiry which could have delayed the project for years.
Freddie Fletcher, chief executive of Newcastle United, said: "This is another step forward for Newcastle's goal to become one of Europe's top clubs and this will be one of the best stadiums in Europe."
One football analyst said: "This is a better solution than the original project and it will calm some investors' nerves." Concerns over the new stadium project have contributed to Newcastle's poor share price performance. Since it floated on the stock market its shares have tumbled from 135p to 96p.
The extra seats and new corporate facilities will boost Newcastle's annual revenues by pounds 15m a year. It will be funded by a combination of a bond issue based on ticket receipts, extra sponsorship and existing cash resources and the club said it would not raise ticket prices to finance the stadium overhaul.
The scheme has been submitted to Newcastle City Council for planning permission. If the Council give the go-ahead, construction work will start next May.
Newcastle is expected to announce a television deal with BSkyB and Granada early in the new year. Its new channel will show matches and club games, although it cannot show Premier League matches.