The detailed designs and costs of the Leeds Arena have been approved by the city council's executive board.
Senior councillors who met to discuss the scheme were told the project was progressing well and due to be completed in 2012.
The £55m scheme at Claypit Lane will hold more than 13,000 people and is expected to create up to 500 jobs.
Councillors heard the scheme had been awarded an entertainment licence enabling it to operate as an arena.
Excavations of the city centre arena site are complete, hoardings have been put in place and initial survey work has been completed.
Construction work is expected to start in early 2011 and a small visitor centre is to be set up on the site for people to watch the building progress.
Further details on the internal design show the venue will be a fan or theatre style with all seats facing the performance area.
The lower bowl will have around 7,000 seats, with around 900 seats and 15 rows of retractable seating to create a large standing area.
The upper bowl will have around 5,300 seats. The council said spectators would be much closer to the stage than other traditional bowl venues.
The arena is being funded by the city council with grant support given by regional development agency Yorkshire Forward before it was abolished earlier this year.