Derry city and Strabane District Council Planning Committee gave permission for the erection of the supermarket and associated car park on undeveloped land to the east of the Kilfennan Link Roundabout and north east of Crescent Link.
Foyle DUP MLA Gary Middleton welcomed the approval.
“The decision by the planning committee today to approve a new Lidl Store in the Waterside is welcome. My DUP colleagues and I have been working with key stakeholders regarding this development for over 2 years.
"This new development in the Waterside will bring 35 new jobs and £5million of investment to the area. This is particularly welcome given the current difficult environment and the many challenges faced by the retail sector.
"This new store will also provide a greater choice of food shopping to consumers across the city. I look forward to seeing the new store open in the future," he said.