HRD Minister M M Pallam Raju announced the decision after discussions with a delegation led by Alice Prochaska, principal at Somerville College here.
An inter-ministerial committee is already in place to discuss the proposal. Somerville College had submitted a proposal to establish the centre.
The institution is a constituent college of University of Oxford and is Indira Gandhi's alma mater.
"This venture is being supported by the HRD Ministry. We are hoping to start this as early as possible. The in-principle approval of 3 million pounds by government of India has been given. We are hoping to start this as soon as possible," Raju told reporters.
University of Oxford and Somerville College will provide 5.5 million pounds to support the centre and a dedicated building will be built for creating a landmark facility for Indira Gandhi Centre for Sustainable Development at the University of Oxford at a cost of about 10.0 million pounds to be raised by Oxford University through philanthropic donations.
Ten acres of land has also been earmarked for the building in the premises of Somerville College.
The centre will honour the late prime minister's legacy to the world by addressing key issues of sustainable development and will result in building up India's intellectual capital and expertise in the area.
"The Centre is aimed at having a transformational impact on the lives of future leaders, who will help to direct a new paradigm of sustainable development in India and beyond," an official statement said.
