Weymouth and Portland Borough Council has approved plans for a 53m (174 ft) observation tower to be built as part of the at Festival Pier redevelopment in Weymouth.
The £3m Weymouth Eye attraction will be operated by Merlin Entertaiments, which already manages the Sea Life attraction on the pier.
Construction is expected to begin in November with work scheduled to be completed by the beginning of the 2012 Olympic Games.
Craig Dunkerley, general manager of Merlin's Sea Life attraction in Weymouth, will be responsible for the new tower attraction.
He said: "This is great news. The 360-degree panoramic views the tower will provide will be magnificent and leave lasting memories of Weymouth for everyone who visits."
The attraction will have a capacity of around 50. Guests will enter an observation pod on ground level which will then slowly ascend and descend. The pod will rotate around the main structure, offering people inside a 360-degree views.