The 42-year-old fulfilled a temporary role throughout the Six Nations after the departure of Martin Johnson after an under-par World Cup.
The former director of rugby at Leeds had stiff competition for the role with ex-South Africa and Italy boss Nick Mallett reportedly in the last two for the role.
Lancaster’s deal runs until shortly after the 2015 Rugby World Cup in England – expiring in January 2016 – and he will now look to appoint his back-room staff.
Having won three Six Nations away games for the first time ever Lancaster is expected to try to hang onto Graham Rowntree as forwards coach and Andy Farrell as defence and backs coach.
Rowntree’s appointment will be an easy one but with Farrell contracted to Premiership champions Saracens his might prove more difficult.
His first major job in the permanent role will be to pick England’s squad for three Tests in South Africa in June before preparing for the autumn internationals against Fiji, Australia, South Africa and New Zealand.
And Lancaster believes, with just 37 games between now and the 2015 World Cup, that time is of the essence.
“I am immensely honoured and proud to accept this role,” said Lancaster.
“From the hundreds of messages I received during the Six Nations I know what supporting England means to millions of people and I am privileged to be involved.
“The players, coaches and the management were superb during the tournament and it’s down to them that we made such positive steps from when we first met up in Leeds.
“The challenge now is to take this squad and the players we will see emerge forward to 2015. It is one that I can’t wait to get stuck into.
“We have a massive task ahead of us in South Africa this summer and we have 37 games before that first World Cup match on home soil, so every second counts in developing players who can win that tournament – which has to be the ultimate aim.
“I want to thank Ian and the panel for giving me the chance to explain my vision for England Rugby and, with their backing, I feel very positive about the future.”
© Sportsbeat 2012
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BIOGRAPHY: Anthony Martial