A key ally of Kenya's ex-President Daniel arap Moi has gained the upper hand in a battle for control of Kanu, the former ruling party.
Mr Biwott was Kenya's most powerful politician under Mr Moi
Nicholas Biwott has been registered as Kanu chairman by the registrar of societies, making him the official opposition leader in parliament.
Ousted leader Uhuru Kenyatta has vowed not to relinquish his offices and is refusing to accept the decision.
Kanu split over a row to join a popular opposition political alliance.
Mr Biwott's faction accused his rival of failing to consult members over his backing for a loose coalition of political parties known as the Orange Democratic Movement, which is set to compete in presidential elections due next year.
Flanked by MPs at Parliament on Tuesday, Mr Kenyatta, the son of Kenya's first post-independence leader, said President Mwai Kibaki's government was in league with Mr Moi in an attempt to destroy the opposition.
"This does not come as a surprise to us. We were aware of this Government ploy to demobilise and destroy the Official Opposition. We dismiss it as complete utter nonsense," he was quoted by the Daily Nation newspaper as saying.
Kanu was in power for almost 40 years after independence in 1963.
Mr Moi has openly expressed his support for Mr Biwott, who continues to be seen by many Kenyans as a symbol of the darkest days of the former president's rule.
Correspondents say the Kanu split marks a realignment in Kenyan politics.
Last year, the Narc coalition that brought President Mwai Kibaki to power in 2002 crumbled, which led to the formation of ODM.