The building work is set to take place between May 2017 and February 2021 at an estimated cost of €600 million.
A new stadium will have a roof over all sections, with the surrounding areas also set to be renovated as part of the plans.
Any proposed changes still have to be approved by a referendum of club representatives, which will be held in early April.
"It was a difficult decision," president Sandro Rosell said.
"The two projects were very attractive but we were committed to put to a referendum a project that was viable from a technical, urban-planning and economic perspective.
"The Nou Camp is part of our collective memory, the biggest stadium in Europe and an icon of the city of Barcelona.
"The option of building a new stadium on a new site has been rejected as the final cost could have saddled the club and its members with debt and tied the hands of future boards of directors.
"To maintain our status as leaders we have to take this historic step which will require effort from everyone involved.
"We will increase the value of our real estate and the capacity to generate additional income without having to sell off assets."
Club director Javier Faus revealed that the planned changes would take eight-10 years to pay off and claimed the club would finance the majority of the cost with their own money.
Camp Nou was built in the 1950s and has previously been renovated in 1982, 1995 and 2008.
Its capacity has varied from figures between 93,053 - 115,000 over the years.
