It is the second time in a row that Verhofstadt has been appointed prime minister.
The king also approved the Liberal-Socialist coalition government chosen by Verhofstadt, following the general election on 18 May.
Francophone Liberals Louis Michel and Didier Reynders kept their posts as foreign minister and finance minister respectively.
Outgoing labour minister Laurette Onkelinx, a Francophone Socialist, became justice minister, replacing Marc Verwilghen.
The new government will convene for the first time on Monday, with the prime minister laying out his government’s plans for the next four years later that day.
On Wednesday, after seven weeks of negotiations, Liberals and Socialists agreed on the composition of a new government to replace the “rainbow coalition” of Liberals, Socialists and Greens that Verhofstadt had led between 1999 and the May election.
In the May election, Flemish and Francophone Liberals together won 49 of the 150 seats in parliament, while the Flemish and Francophone Socialists won a combined 48.
The vote saw the defeat of Christian Democratic parties as well as the Greens, who lost their place in government.
The extreme-right Flemish Vlaams Blok surged to a record score in the polls, gaining 25 seats in parliament, but was immediately sidelined by all the mainstream parties.
Verhofstadt and Michel, the outspoken foreign minister, raised Belgium’s international profile with their strong opposition to the US-led war on Iraq.
At home, the prime minister’s first term was marked by a liberal social agenda that saw the legalisation of gay marriage and euthanasia and the decriminalisation of marijuana.
Belgian political parties mirror the country’s deep and often acrimonious linguistic split between the more prosperous Flemish-speaking Flanders region and French-speaking Wallonia, once the country’s industrial heartland.