Where to put related works in a PhD thesis (Computer Science)
Personally, I think what you are proposing makes better sense in your case than having a traditional separate literature review chapter. Moreover, arranging the theoretical background in close proximity to the relevant methods would probably make it easier to revise the thesis for journal article publication after you've defended the thesis. However, if you choose to do that, I recommend that your "Background" chapter have a subsection dedicated to discussing the broad literature that spans the general theme of your thesis without specifically focusing on any one theme. 

That said, ultimately, you need to talk to your advisor and see what they are comfortable with. If your advisor prefers the traditional dedicated chapter, then you should go with that. Your advisor needs to be comfortable with your thesis structure, too, since that would enable them to be will be your advocate with other people, such as your committee members or outside evaluators, who might not be used to your non-traditional approach.