The Chinese government bought the site in 2018 for £255m with the aim of building a new UK headquarters.
The plans were initially rejected by Tower Hamlets Council in 2022 over safety concerns, but when China resubmitted its application in 2024 the government took over the decision.
The embassy would be the biggest of its kind in Europe and would sit in close proximity with the financial district as well as fibre optic cables carrying sensitive information.
Opponents have warned it could serve as a base for spying and pose security risks.
In its decision letter, the government said there was no suggestion the use of the site as an embassy would interfere with the cables, and added that no bodies with responsibility for national security, including the Home Office and the Foreign Office, had raised concerns or objected to the proposal on the basis of the proximity of the cables.
In a joint letter to the home secretary and foreign secretary about the embassy plans, MI5 director general Sir Ken McCallum and GCHQ’s director Anne Keast-Butler said it was “not realistic to expect to be able wholly to eliminate each and every potential risk”.
However, they added a “proportionate” package of national security mitigations had been developed for the site.
Conditions on the planning approval include that the development must begin within three years, and a steering group of local bodies should be established to manage protests outside the site.