This picture was shot for Permanent Records. Probably around the time they released Couldn't Love You More (September 1992). It was not used until April 1997 though, for the cover of The Very Best Of.
At first I assumed the photograph would have been taken in Glasgow. But some more research points at London; the bridge in the background is Battersea Bridge. One can also see the chimneys of the Battersea power station on the right.
A second picture (used for the cover of The Rest Of The Best) was taken at the same spot and enables us to further pinpoint the location. So now we know John was sitting on one of the houseboats moored along Cheyne Walk.