The detailed plan includes acquisition of land to the north of the existing 2.41-kilometre Wanneroo Raceway layout, on which a separate FIA Grade 2 circuit would be built.
Improved and expanded infrastructure, including grandstand, pit and paddock areas, are also part of the plan.
The council approval means the process now moves to wider community consultation, with the plan set to made available for feedback from 'residents, ratepayers and motorsport enthusiasts' between March 30 and May 10.
“Since opening in 1969, Wanneroo Raceway has become the home of motorsport in Western Australia,” said Wanneroo mayor Tracey Roberts.
“I would encourage those interested in the future of this iconic WA sporting venue to have their say when the consultation period opens later this month.”
The Western Australian Sporting Car Club, which holds the lease to the venue and operates the circuit, welcomed the support of the council.
“The WASCC has been delivering motorsport to the state in events, big and small, for over 90 years, and has maintained and operated Wanneroo Raceway for over 50 years,” said president Russell Sewell.
“The history of cooperation and the excellent current relationship between the club and the City of Wanneroo can achieve synergies in the execution of the strategy.”
The existing Wanneroo Raceway circuit, known until this year as Barbagallo Raceway, underwent a full resurfacing ahead of the 2019 season.
It also staged a Supercars race under lights for the first time last year, after moving to a new shared promoter model with the series itself and the WA state government.
The second Perth SuperNight is currently scheduled to take place on the middle weekend in May.