The venture, which now has the backing of ITV, Channel 4 and Five as well as ISPs BT and TalkTalk, will allow users to watch catch-up TV services such as the BBC iPlayer as well as standard TV services over an internet-connected set-top box.
The BBC Trust, which began its investigation into Project Canvas in February this year, said: "the likely public value of the proposal justifies any potential negative market impact".
Catch-up service reviews:
"After careful consideration, the Trust has provisionally concluded that Canvas is likely to benefit licence fee payers. We believe Canvas could be an important part of the way in which the BBC delivers its services in the future," said Diane Coyle, Chair of the Trust's Strategic Approvals Committee.
However, the Trust said it had also issued a number of conditions that must be followed for the project to go-ahead.
These include publishing core technical well in advance of the launch of Project Canvas to allow all manufacturers to adapt equipment and ensuring it is always free to access, as well as giving all ISPs and content providers equal access to the platform and a review of the service after 12 months to see what affect its having on rivals.
"Our provisional conclusions include some conditions on the BBC's involvement. These conditions are designed to help secure the public value we identified and to help minimise, where possible, any potential harmful effects on the market," added Coyle.
The BBC Trust said there will now be a period of consultation on the conditions until February 2, after which the Trust will issue its final decision.