League One football club Scunthorpe United has been given the green light to erect a new £25m (US$35.6m, €32.4m) stadium as part of a £1.2bn (US$1.7bn, €1.6bn) local regeneration project.

North Lincolnshire Council has signed off the planning application for the 12,000-capacity ground, which is expected to be completed in time for the 2017/18 season. Work on the project could start in May 2016.

The stadium – which will be built on a 60-acre site close to the west side of the M181 – will include club and executive facilities, a gym, office space and areas for commercial development. A supporters' bar will also be part of the development.

“We are at the beginning of a hugely exciting period for Scunthorpe and North Lincolnshire, one which will help to define the area and provide some of the finest football and sports facilities in the country,” said Scunthorpe chair Peter Swann.

The new ground will form part of the Lincolnshire Lakes leisure hub, which includes the building of recreational lakes and artificial beaches, accommodating activities such as windsurfing, sailing, boating, outdoor swimming, cycling and triathlon. A business park and 6,000 new homes will also be built.

For the development of the project, North Lincolnshire Council has reached an agreement in principle with Highways England to construct a new junction from the M181 into the stadium.

“The new football stadium will act as a catalyst for the whole of the Lincolnshire Lakes project and will set the scene for further development at this site,” said Liz Redfern, leader of the council.

“We have been working closely with Scunthorpe United and everyone involved to progress these exciting plans. Today signifies a major milestone and means we can now move forward with plans to build this fantastic venue for football fans.”