Wheeldon Homes is set to build a five storey apartment block next to the River Derwent.
The development will house 33 apartments and will occupy a former metalworks site on the corner of Mansfield Road and Fox Street.
The quality development has been designed by Matthew Montague Architects.
The firm originally applied to build the properties, opposite the Waterside Inn (formerly the Bridge Inn) almost three years ago. That scheme was for 28 apartments across six storeys.
However, concerns over the impact the building’s modern style and materials were raised at that time, and the plans had to be rethought.
Derby City Council’s planning team have now approved the fresh plans which were scaled down to take into consideration local concerns.
Councillor Robin Wood said: “The architect has scaled it down and made quite a few compromises. I think now is the time to allow it through.”