The shopping village, which attracts millions of visitors each year, will increase in size by 24 per cent once the building work is completed.
It will add an extra 5,191 square metres of retail space and the main access road will get two new lanes and a set of traffic lights to ease congestion.
The plans, approved by Cherwell District Council yesterday, were revised from the initial application last July to add 519 parking spaces rather than 372.
Developers Bicester Nominees Ltd & Bicester II Nominees Ltd submitted the application which involve bulldozing over Tesco, the petrol station and part of the existing outlet to make room for 28 more shops.
There will also be a new Park and Ride facility, a new footpath to the train station and various cycle and pedestrian routes, including direct links to the town centre.
Andy Preston, Cherwell’s head of development management, said: “Bicester Village attracts millions of visitors from across the world each year so it’s important that provisions are in place to meet the demand.
“This increase in spaces, plus the associated transport improvements, should help to achieve that goal. It will also improve access from Bicester Village to the town centre which will hopefully boost footfall for all of the local traders.”
Traffic lights will be installed at the Pingle Drive roundabout and two new Eastbound lanes will be added to the A41 at the Esso roundabout.
Bicester Village opened with 65 shops in 1995 and has since doubled that to more than 130 with 1,838 car parking spaces.