Manchester City Council have granted permission for up to 14,500 extra seats to be added to the stadium - 6,250 at either end and 2,000 around the pitch - but the club will take an incremental approach by first developing one end of the ground before making a decision on further expansion.
"Manchester City Football Club has today received formal notification of the granting of planning permission to expand the Etihad Stadium," a club statement said.
"It is the club's current intention to first proceed with the development of the South Stand. The opportunity also exists to expand the North Stand and to introduce additional pitch-side seating in the future for which planning permission has also been granted."
The planning permission granted on Thursday is valid for three years, and City would need to take up the opportunity to begin work on the North Stand within that time or submit a fresh application. Development of the South Stand will take the ground's capacity to around 54,000.