Aldi applied for permission to build a store on the site of the Malmesbury Garden Centre, with a request for outline permission for a replacement garden centre and other employment sites, while Lidl wanted to build on a green field site on the other side of the road to the Waitrose car park.
Either, neither or both superstores could have been granted permission - but planners at Wiltshire Council recommended Lidl be refused and Aldi approved, and members of the committee followed their advice.
Glen Stidever, head of property at Lidl, who lives in Malmesbury, argued at the meeting that the Lidl site's closer proximity to the town centre made it better option.
"There are no other comparable sites. It weights heavily in favour of the proposal," he said.
Nigel Roberts, who owns the land where the Lidl site lies, also supported the application. He said he lived adjacent to the site and revealed he had been approached by both supermarket chains - and said he had offered to guarantee there would be no further development on the rest of the site in the foreseeable future. But members decided to refuse the application because it was outside the town boundary in open countryside, and that it would damage the appearance of a conservation area.
Local resident Barbara Bowman, who told the committee her husband could trace his roots in Malmesbury back to the time of King Athelstan, urged members to support the Aldi application.
"We survived the M4 motorway, and the bypass. Malmesbury needs a supermarket for everybody to shop in," she said.
"We need to bring people into Malmesbury and a supermarket will do that.
"It's a working market town and it will survive a supermarket - it will!"
Simon Glover, property director for Aldi, said the development would reinvigorate a brown field site and bring competition and choice for shoppers who might currently have to travel to Cirencester or Chippenham.
The application was approved, subject to conditions.