She will join Len Goodman, Craig Revel Horwood and Bruno Tonioli on the judging panel for Strictly when it returns in the autumn.
Bussell has appeared as a guest judge on the show but now joins on a full-time basis to replace Alesha Dixon.
BBC bosses are understood to have spent months trying to persuade her to take up the role after Alesha left to help present ITV’s Britain’s Got Talent.
Bussell announced her retirement as principal dancer at the Royal Ballet in 2006 and gave her final performance the following year. She now lives in Sydney with her Australian banker husband, Angus Forbes, and their two daughters.