The pregnant pop star – who has decided to move out of her central London apartment because it is not child friendly – has splashed out the huge sum on a luxurious six-bedroom home in the Cotswolds, in west-central England.
A spokeswoman for the estate agents who handled the sale confirmed that Lily – who is in a relationship with builder Sam Cooper and is due to give birth in February 2011 - had purchased the property.
She said: "Yes, she is the buyer of Old Overtown House - that's absolutely correct. It's all gone through and she is now the proud new owner.
"There have been rumours for a while that she is buying it but we have not been able to say anything until now.
"She no longer wants it kept secret, it is a done deal."
As well as six bedrooms Old Overtown House boasts five bathrooms and three reception rooms, and features many period details including stone fireplaces and exposed beams.
The extensive grounds also contain a three-bedroom guest cottage and a croquet lawn.
The estate agent added to the MailOnline website: "The gardens and grounds are a particular feature of the property and provide a peaceful and safe haven.
"These include a productive Kitchen Garden, Rose Garden, Parterre, Water Garden and probably the best croquet lawn in Gloucestershire."