The project, called 15 Penn Plaza, is still in the planning stages. Developer Vornado Realty Trust has not set a date for its construction and has yet to sign a major commercial tenant.
But the plans alone for a glass office tower, which would stand higher than the Empire State Building's 86-floor observatory, infuriated the landmark's owner, Anthony Malkin, so much that he called it an "assault on New York City and its iconography."
Council members voted overwhelmingly in favor of the project.
They said New York City and its world-famous skyline cannot afford to be frozen in time and must embrace new investments.
"We can't make decisions based on one building," said Councilman Mark Weprin. "The city has to grow, and it's going to continue to grow."
Mayor Michael Bloomberg also backed the project this week, dismissing Malkin's argument as delusional.
"Anybody that builds a building in New York City changes its skyline - we don't have to run around to every other owner and apologize," he said. "One guy owns a building, he'd like to have it be the only tall building - I'm sorry, that's not the real world."
Plans envision a 67-story, 1,190-foot-tall office tower two blocks west of the Empire State Building, which stands 102 stories and 1,454 feet but has an 86th-floor observation deck about 1,050 feet above ground.
Malkin had lobbied the council to cut the tower by one-third the proposed height.
He said in a statement after the vote that the owners believed the new building's height and design encroached on the most iconic image in New York's skyline. But he conceded that the City Council had the final say.
"They have gone out of their way to listen to our position," he said. "In the end ... it was up to them to decide."
A spokesman for the developer released a statement thanking those connected with the approval of the project, which the company believes "will be an outstanding addition to New York's iconic skyline."
The Empire State Building was the city's tallest when it was completed in November 1930. Today, more than 3.8 million people visit its observatories each year.
On a clear day, the view stretches 80 miles, as far as Pennsylvania and Massachusetts.
Vornado needed the council's action to rezone the area to accommodate a more dense development than local ordinances allow.
The developer also needed the city's approval for transit improvements that Vornado has promised to finance.
David Greenbaum, president of Vornado Realty Trust's New York chapter, told lawmakers during a hearing Monday that those include wider rail platforms at nearby Pennsylvania Station, better access to subway stations and the reopening of an underground passage connecting nearby subway lines and commuter trains to New Jersey.