That's an acceptable way to do it if you're using the crank jack that comes with the car, or a bottle jack. Use a block of wood (like a 2x4 cut to about 8 inches long) between the jackstand and the car to keep the edges of the jackstands from scratching or denting. Make sure it's in park, the parking brake is on, and the wheels are chocked before you get under it!
My personal preference is to use a hydraulic jack. Roll it under the car straight in from the front and lift from the crossmember underneath the engine. This conveniently lifts both sides at once. Then place the jackstands where you want them, depending on what type of work you're doing: under the aforementioned jack points if you want pressure off the front suspension, or under the front shocks if you want it supported at the suspension. Again, put it in park, parking brake on, and wheels chocked.
Also, check out the "Diesel Discussion" forum for plenty more information on your 300D and similar cars. That's the best place for diesel-specific information, as well as other discussion regarding the W123 body (like yours) since a large percentage of those are diesel powered.
'83 240D "Steiner"
'00 New Beetle TDI