Kenneth Branagh is signed on to direct the new version of the original rags-to-riches tale, with Oscar-winner Cate Blanchett as the wicked stepmother.
Harry Potter star Emma Watson has been in talks for the role, but the deal fell through, making way for newcomer Lily to star in her very own fairytale, Variety reported.
The 24-year-old British actress proved a hit as outrageous cousin Lady Rose who was sent to Downton Abbey in series three to keep her away from the wild partying of London in the roaring 20s. She returned in the last Christmas special.
Lily has had minor film roles in Fast Girls and Clash Of The Titans.
Cinderella is the latest in a string of fairytales being remade for the big screen, including Mirror, Mirror, Maleficent and a version of Beauty And The Beast.
Filming is due to start in the autumn with a release date set for 2014.