Lewis Hamilton and Jenson Button will form a formidable partnership [EPA]

McLaren confirmed the multi-year deal after Button failed to negotiate a deal with his former team Brawn GP, now renamed Mercedes Grand Prix.

The announcement completes an astonishing year for 29-year-old Button who this time last year did not know if he even had a future in the sport when his then-employers Honda pulled out for financial reasons.

Button went on to win six of the first seven races of the season for Brawn GP, the team that emerged from the remains of Honda.

"McLaren Mercedes is delighted to announce the signing of the reigning world champion Jenson Button to a multi-year deal," a McLaren statement said.

"He will be partnered by 2008 world champion Lewis Hamilton, who will be embarking on his fourth consecutive season as a Vodafone McLaren Mercedes driver."

'Difficult decision'

"It's always a difficult decision to leave a team when you've been there for so long.

"But life is all about challenges - and, most important of all, it's about challenging yourself," Button said.

"So, although I won the World Championship with Brawn GP, and I'll never forget that, I was always adamant that I wanted to continue to set myself fresh challenges.

"You can't help but be affected by this team's phenomenal history. McLaren is one of the greats of world sport, and its achievements and list of past champions read like a Who's Who of Formula One," he added.

"From a personal point of view, it's also a great pleasure to be joining a fellow British World Champion. Lewis has achieved an incredible level of success in a very short period of time, and he's a wonderfully gifted driver who has earned the respect of every Formula One driver.

"I'm sure there's plenty that we can learn from each other, and I’m really looking forward to using our combined knowledge to push the team forward.

"Also, I think it’s fantastic that we’ll be forming an all-British line-up. I know that we both fly the flag with pride, and I sincerely hope we can make the whole of the United Kingdom, as well as Vodafone McLaren Mercedes fans across the world, proud.

The signing means Mercedes-powered McLaren will have two champion drivers for the first time since 1989 when France's Alain Prost and Brazilian Ayrton Senna formed an explosive pairing at the Woking-based team.

Champion line-up

It will also be the first time that a team has started the new season with a line-up featuring the most recent two successive world champions and the first pairing of British champions since Graham Hill joined Jim Clark at Lotus in 1968.

"It has always been our policy to employ the two very best possible drivers," said team principal Martin Whitmarsh.

"In Jenson and Lewis, we feel we not only have the fastest pairing on the 2010 grid but also the two most complete, professional and dedicated drivers in Formula One.

"I want to make clear that Jenson's decision to join us was in no way motivated by money," he added.

"We'll be paying him no more than he could be getting elsewhere."

While Button will be well rewarded financially for his decision, with reports suggesting a pay packet of about $10.09 million a year, he also faces the toughest challenge of his career.

Hamilton, 24, has been nurtured by McLaren for more than a decade and has made the team his own since bursting on to the scene as a sensational rookie in 2007.

"It's Lewis Hamilton's patch, it's his territory and he's made it his own. He knows everybody and knows where all the green buttons are to press," former McLaren driver turned television commentator Martin Brundle told the BBC.

Hamilton said he looked forward to working with Button, while also extending his best wishes to departing Finnish team mate Heikki Kovalainen.

"I already know Jenson, and we get on very well together. We both really want our team to succeed," he said.

"Although we'll be pushing each other hard, I'm sure we'll very quickly establish a great working relationship. He's an exceptional driver: very controlled and very smooth, and he has a real depth of knowledge and experience.

"I think we'll complement each other very well, and our collaboration will make the team stronger as a result."