The council's planning committee unanimously approved the plans for 5,000 homes, three primary schools, a secondary school, medical facilities and leisure and retail space at a meeting on Thursday.
The site, on former Ministry of Defence land at Lodge Hill, Chattenden, was designated an SSSI last year because of the presence of nightingales.
As a result, a planning inspector declared the council’s core strategy unsound and developer Land Securities had to reassess the environmental impact on the site.
The proposals have not changed, but Land Securities has now submitted fresh material, which has been referred to the secretary of state and quango Natural England.
A Section 106 agreement with 25 conditions requires contributions including £7.5 million towards highway and public transport improvements on the A228 and A289 roads, and £90,000 for cycle links to the Medway City Estate business park.
Medway Council director for regeneration, community and culture Robin Cooper said the development is "one of the key regeneration projects in Medway" and he is pleased the application is being reconsidered.
But campaign groups including Buglife, Kent Wildlife Trust and the RSPB objected to the scheme.
The RSPB, which raised concerns about the presence of nightingales in the area during the core strategy examination, has said it intends to fight the development and will ask the secretary of state to intervene.
RSPB chief executive Mike Clark said the outline planning application "has never been consistent" with the National Planning Policy Framework (NPPF).
"The council has failed to demonstrate to an independent inspector last year that there is no alternative, or that the development outweighs the damage to this unique site," he said.