The Spanish Cabinet gave the go-ahead last week at the height of the Pinochet affair. The judge presiding over Mr Noye's case is Baltasar Garzon, the judge seeking to extradite the former Chilean dictator from London.
Mr Noye will appear in Spain's high court, the Audiencia Nacional, in Madrid on 16 November for a date to be set for the full extradition request. Mr Noye, 41, was arrested in Barbate, southern Spain, on 29 August. He is wanted for questioning over the stabbing of Mr Cameron, 21, in May 1996 during an argument with a motorist on a slip road off the M25 in Swanley, Kent.
A spokesman for the British embassy in Madrid said: "We have learnt that the Spanish Cabinet approved the extradition request on October 30 and the case has now been referred to the Audiencia Nacional."
Mr Noye will have the right of appeal against any decision to extradite. If the court rules against extradition, the legal process will be exhausted and he will be free to remain in Spain.