Heat the oil in a large, heavy-based casserole and soften the onion and garlic.
Season the chicken pieces and add to the pot, one at a time, and allow to brown on all sides for 5 minutes. Add the saffron and the water, cover the pot, and leave to cook over a medium heat for 15 minutes.
Skin the tomatoes and cut into small pieces. Add to the pot with the parsley and lemon, then lower the heat a little, and let the sauce reduce slightly. Add the olives and season with the pepper and salt, to taste.
Serve the chicken with the sauce and olives spooned around the sides.