The design watchdog has written to Lyall, Liverpool Council and English Heritage expressing its support for the scheme.
If the development does win the go-ahead it will see the construction of a mixed-use scheme, comprising three buildings and including a new tower.
Lyall's designs have always faced the threat of heavy criticism because of the site's proximity to the much-loved 'Three Graces'.
But the CABE letter said: 'We offer our support to this proposal, and would be happy to see it built as part of the general revival of this part of Liverpool.
'The visualisations demonstrate the positive impact of the scheme on views both near and distant. Careful thought in terms of quality of life, landscape design, activity at ground level and routes and views to the surrounding area is evident.
'We think that both the massing of the scheme and the subtle and sophisticated nature of the architecture proposed will be compatible with the much loved 'Three Graces', as well as new developments along the waterfront.'
However, the letter does go on to warn that Lyall must be retained on the scheme if it is to be a success.
'To be realised successfully, this scheme will require great care in its detailed design. To ensure quality in the completed buildings, the client needs to consider carefully the means by which they are procured,' the letter adds.
'Given the location of this project in the buffer zone of a World Heritage Site, and the tall building proposed, it will be essential that John Lyall Architects is retained by the client throughout the process, to ensure that the architect is able to influence the quality of the outcome,' it adds.