It is expected to be running by the summertime, with plans to attract around 250,000 customers a year.
The wheel, named the Brighton O, would cost £6 million and would create 30 full-time jobs.
It would be built on the Madeira Drive seafront promenade, opposite The Aquarium.
Permission was temporary, with the wheel expected to operate for at least five years, east of the Palace Pier opposite the Sea Life Centre.
Despite objections from several businesses and residents, Paramount Attractions, the company planning to operate the ride, will go ahead with plans, although they must first agree to conditions set out by Brighton and Hove City Council.
The wheel will be comprised of 36 pods of around six to eight people, with a total capacity of 280 people at any one time, and rides lasting approximately 11 to 12 minutes.
The wheel is expected to boost the local tourism industry and help regenerate the eastern part of the sea front, where there are less thriving businesses than the west.
Paramount will be required to ensure minimal noise and take responsibility for adequate public transport to the attraction.
A council spokesman commented: “We had to weigh up the pros and cons of this scheme and there were many people making representations on both sides. We felt that on balance the advantages outweighed the disadvantages, especially given that this is a temporary consent.
“We’re still hopeful that the i360 viewing tower will be delivered at the West Pier site.
“But for now this attraction will bring some benefits to the seafront and help our local businesses through the recession.