Car parking, toilets and club rooms are also proposed at the site. Rotorua BMX Club president Grant Butterworth said he was delighted with the council's support for the club's proposals.
"It's a really bold initiative, but through a strong collaborative partnership with the council and other community partners we have the potential to create something really special for Rotorua and for our community."
He said the club was looking to raise at least $600,000 for the project and would seek the council's help in approaching organisations for financial support.
"We've already started that process and we have good indications of support.
"Because it's still just a concept we want to consult with all community groups, like iwi and our potential neighbours at Te Puia.
"The next step is to firm up design and costs."
Mr Butterworth said national events could attract up to 1000 riders and 2000 to 3000 supporters to the city for a week to 10 days.
"So in terms of economic benefit for Rotorua it's more than just a single event.
"We'd also love to be able to hold elite training camps and host off-shore teams," he said.
There are only two elite BMX tracks in the country - in Auckland and Wellington.
Council strategy, policy and finance committee chairwoman Merepeka Raukawa-Tait said the facility would not only support the council's long term goals, but would also support economic growth by attracting visitors and growing business opportunities and employment.
"This proposal fits well with our growing reputation as a world class biking destination and complements our status as the country's mountain biking capital.
"However, the council's support is one of "in principle" only at this stage and there is a lot of work to be done.
"But it gives the BMX club a mandate to proceed with planning, design and a fundraising programme."