Merthyr Tydfil college and the Glamorgan university will share more than 25,000 students.
The merger has been approved by ELWa, the post-16 education and training funding body in Wales, which will submit the recommendations to the Welsh Assembly.
It will also have be approved by Jane Davidson, the Welsh education secretary.
There have been 10 mergers of colleges and universities in England since 1993, the most recent, in 2003, being between Thames Valley university and Reading college and school of arts and design (see box). Most were specialist colleges rather than general FE.
ELWa said a two-month consultation on the proposals yielded an overwhelming response in favour of merger, which has also been approved by the Higher Education Funding Council for Wales.
The merger is expected to happen on May 1 and the Merthyr Tydfil campus will be known as Merthyr Tydfil College - University of Glamorgan.
Howard Jenkins, the college's principal, said: "This is great news. It will mean a strengthening of our further education provision as well as a major expansion of higher education courses for the people of Merthyr Tydfil.
"We are a small college with around 800 full-time students and this links us up with a pretty extensive resource just down the road in Pontypridd.
"All our managers do about five different jobs whereas, in Glamorgan, they have about 20 people in each department.
"Both institutions are looking to expand the take-up of higher education.
This gives the university a base at the top of our valley. What we are talking about is making Merthyr Tydfil a university town."
He said the merger would provide more funding opportunities, and enable the college to use the university links to attract international students.
The merger aims to provide increased choice, wider access, seamless progression and high quality.
An ELWa spokesman said: "Overall the aim would be to create a more aspirational environment with more learners progressing into higher education, either at Glamorgan or other universities.
"Student support would be enhanced and more counselling and mentoring would be made available to the FE students in particular."
1. Lincolnshire college of art and design and Lincolnshire college of agriculture and horticulture with De Montfort university, Leicester, in August 1994.
2. Epsom school of art and design with Surrey institute of art and design, August 1994.
3. Portsmouth college of art and design and FE with Portsmouth university, 1994.
4. Bedford college of HE with De Montfort university, Leicester, August 1994.
5. Harrogate college with Leeds Metropolitan university, August 1998.
6. High Peak college with University of Derby, August 1998 7. Newton Rigg college with Central Lancashire university, August 1998.
8. Brackenhurst college with Nottingham Trent university, April 1999 9. Cordwainers college with The London institute higher education corporation, August 2000.
10. Reading college and school of arts and design with Thames Valley university, December 2003.