UEFA have confirmed that Gibraltar have been admitted as a provisional member.
A decision on permanent membership will be made at the UEFA Congress in London in May next year.
The move is a huge step forward for the tiny nation, located at the bottom of the Spanish coast.
Gibraltar first applied for membership in the mid 1990s but with the Spanish FA leading vociferous objections - Uefa have constantly rejected them.
But Gibraltar took their case to the Court of Arbitration for Sport (CAS) who ruled in their favour - meaning UEFA have been left with little option but to move forward with the application.
A statement from UEFA's Executive Committee confirmed: "The committee has admitted Gibraltar as a provisional member of UEFA as from today, 1 October 2012. This follows a ruling by the Court of Arbitration for Sport (CAS) in August 2011.
"A decision on the admission of the Gibraltar Football Association (GFA) as a full member of UEFA will be taken by the XXXVII Ordinary UEFA Congress in London in May 2013."
Speaking to Sky Sports, Allen Bula - Gibraltar's development officer and national head coach - admitted their delight at the decision taken by UEFA and admitted they were hopeful of being able to enter the qualifiers for Euro 2016.
He said: "It's a great decision, and hopefully we will be full members in May 2013.
"The Gibraltar National A team is ready for Euro 2016 qualifiers.
"We have been working hard to show Europe we have the quality to play at this level, and recent results since 2011 have shown this.
"For sure we will not disappoint in Europe, we will gain points in our group, and we will shock Europe with some good results in our favour, that I guarantee you.
"My vision which is shared by my technical team and players, is to become the first of the smallest nations, to qualify for Euro final stages. Mark my words when I set out to do something I accomplish it."
Bula admits playing at Wembley is Gibraltar's dream.
"I am hoping that we will be in same group as England, as playing in Wembley is a dream for all of us. But it can be a nightmare result for England on the night," he said.
"We also can't wait for the day we play against Spain, both at home and away!"
Spanish Sports Minister Jose Ignacio Wert said they would continue to oppose Gibraltar's place at UEFA.
"We have already said we will exhaust all legal means," he told Spanish TV broadcaster Telemadrid.
"I can say that we are reasonably optimistic that this provisionality will not become a definitive acceptance."
Sky Sports did a feature on Gibraltar's plight in April 2011 - Click here to read Rock and a hard place