The Greater London Authority, headed by London Mayor Sadiq Khan, gave the green light on Friday for the huge effigy to be unleashed.
Organisers plan to fly the blimp – which depicts Mr Trump wearing a nappy and clutching a mobile phone – over Parliament Square on Tuesday, the second day of the state visit.
They must now await final approval from the Metropolitan Police, who are expected to give their decision on Monday.
The Trump Baby team, which is part of the Stop Trump coalition, said it is confident police will also give the thumbs-up after the force previously allowed the blimp to fly during Mr Trump’s visit to the capital last July.
But organisers also say the blimp will only fly if a fundraiser for charities “pushing back against the politics of hate and division” hits £30,000.
Anna Vickerstaff, a Trump blimp “Babysitter”, said: “Now that the GLA has given us permission, we’re almost ready to fly the baby.
“All we need now is for the public to help us to hit our fundraiser target in support of the groups who are fighting the impacts of Trump’s disastrous policies.
“We’ve promised to get the baby in the air again – but only if and when we raise money for these groups.
“We’re all for making a joke out of Trump, but we won’t let the opportunity pass to support those fighting the very serious impacts of what he’s doing.”
The crowdfund page stood at nearly £18,500 on Friday afternoon with three days remaining.
A spokesman for the Greater London Authority said its City Operations Unit gave permission after the application was “carefully assessed” by officials.
Mr Trump’s schedule for Tuesday includes a business breakfast at St James’s Palace with Prime Minister Theresa May and senior business leaders from the US and UK.
He will then visit Downing Street, before hosting a dinner at the residence of the US ambassador when he will be joined by the Prince of Wales and the Duchess of Cornwall.
Several protest groups plan to march through London during the three-day visit, with the main demonstration due to convene at Trafalgar Square at 11am on Tuesday.
The Campaign for Nuclear Disarmament is the latest to announce its involvement, pledging to protest against Mr “Trump’s nuclear brinkmanship” and “penchant for tearing up nuclear treaties”.
General secretary Kate Hudson said: “Yes, Britain must foster good diplomatic relations with all countries, but unfurling the red carpet and hosting a state banquet for a US president like Donald Trump is entirely inappropriate.”