The London Legacy Development Corporation board (LLDC) this week unanimously made the decision in favour of the Barclays Premier League club becoming the preferred bidder for the use of the venue.
A final deal is some way from being struck between the LLDC and the Hammers but Allardyce reckons a move away from Upton Park will be great for West Ham.
"I think it is outstanding news for the football club for the future," he said.
"There is still a long way to go, I know that, but we are in the driving seat and I just hope they can continue to move it forward and deliver what would be a fantastic venue in the future of West Ham United."
Allardyce has praised the support his players receive from the fans at Upton Park but thinks a bigger crowd at the Olympic Stadium would lead to even better backing from the stands.
"There was a wonderful atmosphere at Highbury but there is a better atmosphere at the Emirates, that says it all doesn't it," he said.
"We have a wonderful atmosphere at Upton Park and it would be even better at the Olympic Park."
Although he is clearly pleased with the outcome of the LLDC decision Allardyce was quick to point out he remains focused on the present and the visit of Liverpool on Sunday with his team still struggling with a number of players on the treatment table.
He said: "I'm far too busy focusing on football and Liverpool at the moment to consider that, it is not in my domain at the moment.
"Mine is getting these players ready for Liverpool with our injury plight still a concern - a great result doesn't overshadow the fact we are struggling with injuries.
"The squad is at its limit at the moment and we have to try and get those players back as quickly as possible with the hardest month of the year coming up."
One of Allardyce's injured players is on-loan striker Andy Carroll.
The England international would have been ineligible to feature against his parent club Liverpool anyway but faces between six to eight weeks on the sidelines with a knee injury.
The 23-year-old was questioned by police investigating an alleged assault on a photographer following the club's Christmas party in Dublin last weekend. West Ham denied that Carroll had been involved in a physical confrontation.
Allardyce said: "I've got the details, all the statements. I suppose at the moment if the police are still some investigation going on I think I cant comment.
"All I know it was a huge aggravation by a photographer who became a pest. I'm happy with the way Andy and all the lads conducted themselves.
"If the photographer appeared to have been following them around for hours and hours and hours and hiding behind bins waiting for him to come out after he's come out - then what will be will be."
When asked if he had spoken to Carroll, Allardyce said: "Not really no, they had a good time and enjoyed themselves like they should do. They've come back and it's built again a fantastic spirit in the team.
"The security guards have come out and given their statements and I'm happy with what they've said."
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