Tests by Trading Standards officers found the multiple's Maitre Special Chicken breast fillet contained less meat than the label declared. The label claimed it was 92%, but tests found it actually contained less than 79% meat.
A shopper at Lidl's Worcester store had complained that the meat tasted very salty. Simon Wilkes at Worcestershire County Council said Lidl was warned about the findings two years ago, but it failed to change the labelling or take the product off shelves.
A spokeswoman for the store said: "A full investigation has been launched with the supplier and the product has been withdrawn from sale while it is concluded."
Lidl has also fallen foul of trading standards in Lincolnshire, where it has been found guilty of selling mislabelled beef mince.