The World Athletics Championships will be held in the United Kingdom for the first time after London was selected ahead of Doha to host the 2017 event.
International Association of Athletics Federations (IAAF) president Lamine Diack said London won the vote 16-10.
The English capital, which failed with bids to host the 2001 and 2015 Worlds, will use the 2012 Olympic Stadium.
Bid leader Sebastian Coe said: "This bid has been developed by athletes and athletics, for athletes and athletics."
He added: "We believe 2017 will cement the clear, unambiguous vision we offered the world in 2005 [when London was awarded the 2012 Olympics], a vision that promised a real legacy through unprecedented levels of investment in our new national stadium.
"This is the natural continuation of the work being done on 2012."
UK Athletics boss and bid chairman Ed Warner revealed that the budget for the championships would now cover the £5m prize fund as Doha offered to do.
Warner said: "I'm not a veteran of bids but people tell me always keep a late reveal.
"We planned it for some time. There was no knee-jerk reaction."
World youth champion sprinter Jodie Williams, 18, and Olympic heptathlon gold medallist Denise Lewis made the final presentations to the IAAF.
Williams, who will be 23 in 2017, stressed her "ultimate dream" is to compete for a senior world title in front of a home crowd.
A message of support from Prime Minister David Cameron was also played to the council.
British athletes and politicians have welcomed the decision, with World, European and Commonwealth 400m hurdles champion Dai Greene admitting he "had a huge smile" on his face.
London had been set to host the 2005 championships after they were originally awarded to the city.
However, after plans to build a 43,000-capacity stadium at Picketts Lock in the north of the city were abandoned as too expensive, a UK Athletics suggestion that the Don Valley Stadium in Sheffield be used instead was rejected by the IAAF.
The championships were awarded to Helsinki, which hosted the first event in 1983.