The migrants, including pregnant women and scores of children, were saved by the French charity SOS Mediterranee on Saturday.
They were taken on board its ship Aquarius, which is now between Malta and Sicily.
But Malta and Italy -- whose new populist government has vowed a tough new stance on immigration -- have both refused to take the migrants in, triggering concern in the international community about their plight.
Spain's new Socialist Prime Minister Pedro Sanchez agreed to allow the ship to dock in its eastern port of Valencia.
"The prime minister has given instructions for Spain to honour international commitments on humanitarian crises and announced that the country will receive the ship Aquarius," his office said in a statement.
"It is our obligation to help to avoid a humanitarian catastrophe and to offer a safe port to these people."