The college's senior management had hoped the new college would become part of its federated structure and argued fiercely that a separate centre would undermine its own education services.
But the South Yorkshire Learning and Skills Council has given its final backing to the independent option, which was supported by the city council.
The LSC gave its decision at its meeting following a five-week consultation period. It said there was overwhelming support for this option during the consultation.
A spokesman said: "The recent consultation exercise has been successful in obtaining feedback from a number of different organisations and individuals.
"More than 150 responses were received with the vast majority, 94 per cent, supporting the proposal.
"A number of concerns were raised by the remaining 6 per cent. The LSC will be responding to these on an individual basis."
The decision has still to be approved by the Department of Education and Skills, but senior management at Sheffield College are not expecting it to be overturned.
A new sixth-form centre, Hillsborough College, is already in the pipeline for the north of the city. It will be run under the college's federated structure, and Sheffield College has argued that an independent college in a neighbouring area will cause conflict over admissions, courses and staffing.
Sheffield College is halfway through a recovery plan since being placed under special measures in 2000 following a poor report from the Office for Standards in Education.
Management claim they have already achieved their recovery targets in admissions, retention and recruitment. They fear the new independent centre could knock their recovery off-course.
The Sheffield MP Helen Jackson has supported Sheffield College in its bid to control the centre. The Labour member for Hillsborough said: "An independent separate structure will damage not just the new college and sixth-form centre in Hillsborough but the good work done in the rest of the city as well.
"It is important that the two (new colleges) are complementary and integrated within the new federation of educational institutions which will make up the future Sheffield College.
"The new management are providing steady expansion of delivery, improved results and closer pastoral care. This is the model that will give good educational opportunities right across the city." The proposal for the independent centre will now pass to the next stage, which is to submit a formal application for funding for consideration by the LSC National Capital Committee.
Sheffield's executive director of education, Jonathan Crossley-Holland, said last week that Sheffield College is a partner in the new sixth-form centre and not an opponent. "There have been differences of opinion but council and college both work in the best interests of young people in Sheffield," he said.