A new station linking Sheffield with London and Birmingham via the HS2 high-speed rail network will be situated at Meadowhall, it has been announced.
The preferred route of phase two running northwards from Birmingham will stop at the shopping centre, which is next to the M1.
Journey times would be 38 minutes to Birmingham and 69 minutes to London.
The Deputy Prime Minister said it was right to site Sheffield's HS2 station away from the city centre.
Nick Clegg, who is MP for Sheffield Hallam, said the HS2 project was "good for the whole country and especially good in healing this north-south divide that we have in our economy for far, far too long".
Asked why the line would not run into Sheffield city centre, Mr Clegg said: "The city centre option is not a cost-free one.
"It would be a lot more expensive and also the train link would be slower, which slightly defeats the purpose of the whole exercise."
Mr Clegg said a route in central Sheffield would have cut through a 4,000 home community housing development, the state-of-the-art Advanced Manufacturing Park in Rotherham and a stretch of ancient woodland.
He said: "If you look at those balance of effects of one location versus another, most fair-minded people would conclude, as the Department for Transport has, that this is a better location."
One farmer based near Hoyland, Barnsley, said he was "absolutely devastated" when he saw the proposed route.
Bryan Mason, who has recently opened a shop at Park Side Farm, said: "We've just got open and then this happens. It's tragic. We don't where it's going to go right at the moment.
"The map shows it going through the business, the house, everything. We're devastated."
Paul Blomfield, Labour MP for Sheffield Central, said the station should be built in the city centre.
"An independent study has shown that a city centre station would bring between £2bn and £5bn more into the local economy, compared to Meadowhall, and create 6,500 extra jobs.
"I'm disappointed ministers have ignored this evidence and I'll be continuing to make the case for the station to be at the heart of our city."
Tim Hale, chairman of the Sheffield Chamber of Commerce's transport forum, said: "While some may wish to have seen it closer to Sheffield city centre, on balance, the connectivity of Meadowhall to the whole of the city region is probably better.
"Now the government must address the resulting issues. It is important that those who are negatively affected by the announcement have their fears dispelled quickly.
"The authorities need to resolve such problems quickly and efficiently so that businesses are not affected, and lives not blighted, by worry over what will happen, when it will happen and how quickly compensation will arrive."
A final route for phase two is expected to be chosen by the end of 2014.
Construction on the Y-shaped extension could start in the middle of the next decade, with the line open by 2032-33.