The discount supermarket will also be opening another 39 stores in the capital, creating around 1,500 jobs.
The Tottenham Court Road store, which is the retailer’s first venture into central London, will be 1,300m sq and will stock Lidl’s full range of products.
New stores also will be opened in Alperton, East Acton, Hackbridge and Watford over the next five years.
This follows the previously-announced introduction of a new head office in Tolworth, southwest London, and the expansion of its Beldevere distribution centre.
A new distribution centre will also be opening near Luton.
Since the German retailer opened its first UK store in 1994, it has expanded to more than 700 outlets and 13 warehouses across the country.
Earlier this year, Lidl shrank its minimum size requirement for new London store openings, creating an opportunity for more inner-city outlets.
The move is widely seen as an answer to rival Aldi’s new Local stores – a sub-brand for smaller sites in London – the first of which opened in Balham in March.
Lidl’s chief executive, Christian Hartnagel, said the plans come nearly 25 years since the brand first launched in London.
“London is at the heart of our growth plans across Great Britain, and we are proud to be in a position where we’re continuing to create new jobs,” he said.
Rajesh Agrawal, Deputy Mayor for Business, said: “Lidl’s commitment to the capital is great news for London shoppers, a big boost for the jobs market and a further show of confidence in the London economy.
“London is one of the most desirable places in the world in which to live, work and build a global business so I’m delighted that Lidl have chosen Tolworth as the location for their new UK headquarters.”