The hotel will comprise 370 rooms and the plans also include creation of a pedestrian walkway as well as improvements to Tower Hill Underground station.
The inspector said in his report (29-page / 249 KB PDF) that the building would not affect the roles of the Tower of London as a landmark and a setting for key historical events.
"The building would be visible in views out from the WHS but these would always be in the context of other more intrusive and taller buildings behind, the harmful impact of which would be diminished," he said.
Tower Hamlets Council refused (3-page / 158KB PDF) the application in March this year, saying the proposed building's height, scale, bulk and design was inappropriate and failed to "preserve or enhance the character, appearance or setting" of the WHS.
The decision followed objections to the plans by Grange Hotel on grounds of design and height. The refusal was made despite recommendations from planning officers to approve the scheme on four occasions and the Council's Strategic Development Committee resolved that planning permission should be granted in November last year.
The inspector said the development's effect on the Tower Conservation Area would not affect its "special interest" and that the architectural and historic interest of nearby listed buildings, including Trinity House and a number of war memorials, would remain protected.
Work on the site is expected to start next year with completion due in 2014.
