Saturday’s decision by Britain's interior ministry has angered Russian officials.
"We can confirm Mr Zakayev has been granted refugee status. His application (for asylum) has been successful," a Home Office spokesman said.
Russia, which sees its fight against Chechen rebels as part of the global "war on terrorism", has already criticised Britain's decision not to extradite Zakayev, accusing London of double standards.
But the EU has criticised Russia for human rights abuses in Chechnya.
Zakayev has been in Britain since December last year and requested asylum within days of his arrival.
Britain rejected Russia's request
for Zakayev's extradition
Russia has charged him with murder and kidnapping.
But Zakayev says he would be killed if he returned to Russia, which accuses him of atrocities dating from the first of two wars in the breakaway Russian region from 1994-96.
Earlier this month Britain rejected Russia's bid to extradite him, saying there was a substantial risk he would tortured if he were sent to Moscow for trial.
Russia had sought to extradite Zakayev on 13 charges from the mid-1990s. Russia first asked for his extradition during the notorious Moscow theatre siege last year, when a Chechen "suicide squad" held hundreds of hostages prisoner.
In the years between the first Chechen war and his flight to Britain, Zakayev became the chief Chechen peace negotiator, meeting Russian officials in Moscow as recently as 2001.
Russian forces left Chechnya in defeat in 1997 at the end of the first war but returned in 1999.