The New Forest is to become England's first new national park for 15 years, ministers have announced.
It becomes Britain's smallest national park at 571 sq km
The decision comes after a seven-month inquiry, following years of campaigning by some environmental lobby groups.
They argued the move will help protect rare animal habitats which are at risk from intensive farming and building.
Rural affairs minister Alun Michael said it would preserve the "unique character" of the forest - situated between Southampton and Bournemouth.
At a Labour Party conference in Bournemouth in September 1999, Deputy Prime Minister John Prescott made the pledge for national park status, saying it was "a birthday present from Labour to the youth of this country".
But it was met with anger from farmers who feared fresh restrictions and were unhappy with further government interference.
Announcing the plans in Parliament Alun Michael told MPs: "Our national parks have a vital role conserving our natural heritage, but conservation alone is not enough - the parks must balance environmental priorities with those of communities.
"Today's decision will help protect the unique character of the New Forest - valued by so many people, and acknowledged as a national treasure for nearly a thousand years - whilst recognising that it is a working, living place with social and economic needs."
The announcement was welcomed by English Nature and the Association of National Park Authorities.
English Nature's chief executive Dr Andy Brown said: "This is history in the making. The National Park Authority is in a good position to take the New Forest forward in a way that will bring together wildlife, people and the local economy in an integrated and positive way.
"We already have a good relationship with the other seven national parks and look forward to welcoming this latest addition into the fold."
Residents will now have 28 days to make any complaints about the park's proposed boundaries.
Dr Julian Lewis, Tory MP for New Forest East, told BBC News Online it was "probably not the right decision".
Many of his constituents feared that the new authority would take the future of the area out of local hands, he said.
"The view of many people is that, if the New Forest needed more protection, it should have been done by way of special legislation rather than by the straitjacket of the national park model.
"What this does is remove a consensual system - a system of checks and balances - that has been in place for centuries and replaces it with a single overarching body.
"Whereas, in the past, decisions about the future of the forest evolved out of a consensus of interested bodies and individuals, the National Park Authority will be able to force decisions through."
Under Monday's proposals, the New Forest National Park will be the country's smallest national park at 571 square km and an estimated population of 38,000.
More than half the land and coastline within the boundaries of the park is already designated as of the highest importance for wildlife - as Sites of Special Scientific interest.
Amongst the rarest species to be found on the forest's gorse and moorland are the Dartford warbler, nightjar and woodlark, as well as the threatened southern damselfly and stag beetle.