The Riverside Medical Practice will relocate just a short distance away to its purpose-built premises at the Tannery development on Barker Street.
The plans to move the practice from Roushill have been approved by Shropshire Clinical Commissioning Group's Primary Care Commissioning Committee.
Shropshire Council agreed to invest in relocating the practice as part of its plans to regenerate Shrewsbury's West End.
It said the challenge was finding a suitable site that the practice's 10,000 patients could easily get to that would also have modern facilities.
Based in the second block on the Tannery site, there are also plans for a pharmacy to be placed in an adjoining ground floor unit.
The new building, which is currently under construction next to the student accommodation block, is set to have double the number of clinical rooms than its predecessor.
It has been designed with the option of expanding and there are currently plans to offer a range of additional services including psychological support and care for alcohol dependency.
Accommodation will also be offered to local patient and self-help groups.
Work has already started on the site, with an expected open date of June 2020.
Julian Povey, chair of Shropshire CCG, said: "The practice and patients at Riverside have been very patient and it has been a challenge to find a suitable site but through partnership working between the practice, the CCG, and the council a great solution has been put forward with the Tannery site."
Tracy Willocks, business manager for the practice, said she was overwhelmed to hear the development had been approved and that many years of hard work has been put into the project.
She added: "I am ecstatic that our patients and staff will now have a building that will support our expansion of services and our vision for the future."
Sarah Harwood, GP partner at the practice, said: "We’re delighted to be moving forward. This new premises will secure the future of the practice as we will be able to continue to offer patients from across Shrewsbury a GP service in the town centre. We are close to transport hubs, with the bus station and train station nearby.
“With the national shortage of GPs, we have been fortunate to have successfully recruited new GPs in the last 18 months. We have also extended our workforce to include a mental health nurse practitioner and clinical pharmacist. This positive outcome will enable us to continue to grow our workforce to meet the needs of our patients.
“In addition, we can now plan to expand our training programme to include more GP trainees and other health care professionals, such as student nurses, to secure the future of primary care for decades to come."
Steve Charmley, Shropshire Council's deputy leader and cabinet member for economic growth, added: "This is brilliant news for the Riverside Medical Practice and its patients as it means the medical practice can remain in a town centre location. It’s also great news for the council and for the town and I’m delighted that our investment has made this move possible.
“We want to help ensure the health of our residents by ensuring that there are good quality, sustainable health services in the county. This move will ensure that this local practice has modern, fit-for-purpose facilities with space for expansion to support growth in patient numbers."