The Leeds-born 18-year-old was given his first-team debut by Blackwell two years ago, but his lack of involvement last season, when he made only five appearances, encouraged him to listen to Charlton's approach.
United are expected to receive an initial fee of around £500k for the defender, and the funds will be used by Blackwell to strengthen his squad in time of the start of the Championship season.
Walton's departure, however, is likely to upset large sections of Leeds' support as another of the club's academy products heads out of Elland Road.
Aaron Lennon, Scott Carson and James Milner have all left the club during Blackwell's tenure – transfers enforced by heavy debts and against the wishes of United's manager – but he insisted today that Walton would not become another example of young talent departing on the cheap.
Blackwell said in the Yorkshire Evening Post: "Any money that comes into the club will help us to rebuild the squad before next season. We felt the offer was acceptable.
"Simon's been given an opportunity to go to the Premier League, and I felt it was right to let him speak to Charlton. I'm a big believer in allowing my staff and players to consider options like this.
"I did it with John Carver when Carlisle were looking to make him their new manager, and I was delighted that he wanted to stay with us. Simon might look at things from a different angle and decide that Charlton is the right move for him.
"The last thing you want as a manager is for someone to find out that they had an opportunity to move to a higher level, but weren't given the chance to consider it. In John's case he spoke to Carlisle, made a decision and got it out of his system. That way there are no regrets and no second thoughts."