Birmingham now has five universities in the city after the government approved full status for Newman University College.
Ministers announced in June that rules stopping smaller institutions from becoming universities would be removed.
They previously needed a minimum of 4,000 students but that number has been reduced to 1,000.
Under the new guidelines, University College Birmingham was granted university status in December.
The two new institutions join the University of Birmingham, Aston University and Birmingham City University.
Principal Professor Peter Lutzeier said the institution in Bartley Green would change its name to Newman University.
He said: "It has been a long road to get here but achieving full university status provides welcome recognition for the quality of Newman's courses, graduates and staff."
The university, which has 3,000 students, was established in 1968 and is named after its patron, Blessed John Henry Cardinal Newman, who was beatified during the Pope's visit to Birmingham in 2010.
It offers teacher training courses and a full range of degree courses in the humanities and social sciences.