The crystal and magnetic structure of multiferroic LiFe(WO4)2 were investigated by temperature and magnetic-field dependent specific heat, susceptibility and neutron diffraction experiments on single crystals. Considering only the two nearest-neighbour magnetic interactions, the system forms a J1, J2 magnetic chain but more extended interactions are sizeable. Two different magnetic phases exhibiting long-range incommensurate order evolve at TN1 ≈ 22.2 K and TN2 ≈ 19 K. First, a spin-density wave develops with moments lying in the ac plane. In its multiferroic phase below TN2, LiFe(WO4)2 exhibits a spiral arrangement with an additional spin-component along b. Therefore, the inverse Dzyaloshinskii-Moriya mechanism fully explains the multiferroic behavior in this material. A partially unbalanced multiferroic domain distribution was observed even in the absence of an applied electric field. For both phases only a slight temperature dependence of the incommensurability was observed and there is no commensurate phase emerging at low temperature or at finite magnetic fields up to 6 T. LiFe(WO4)2 thus exhibits a simple phase diagram with the typical sequence of transitions for a type-II multiferroic material.