Nick Clegg with wife Miriam after the announcement
The announcement
The 40-year-old beat Chris Huhne to become the party's third leader in two years - in a contest which turned out to be even closer than expected.
Mr Clegg, an ex-journalist and former Euro MP, won 20,988 votes to the 20,477 votes cast for Mr Huhne by members.
In his acceptance speech Mr Clegg said he wanted his leadership to be about "ambition and change", saying "we want to change politics and change Britain".
The Sheffield Hallam MP said he wanted to mark the "beginning of Britain's liberal future".
Mr Clegg, speaking after the announcement at a central London hotel, acknowledged it had been a "close fought contest" and praised his rival, who he said he was looking forward to working with.
He said he wanted to attract those voters who shared liberal values, but did not currently vote for the party.
I want the Liberal Democrats to be the future of politics
Nick Clegg
Profile: Nick Clegg Clegg speech in full
He thanked Vincent Cable for a "spellbinding" performance as acting leader - and praised his predecessor Sir Menzies Campbell, whose resignation in October sparked the leadership race.
Mr Clegg, who has two children with wife Miriam, a Spanish lawyer, said that without Sir Menzies, the party would not have the "bright future" it now faced.
He said Labour and the Conservatives were "mutating" into each other, and urged disaffected voters to join the Lib Dems, saying he wanted to "provide a liberal alternative to the discredited politics of big government".
Public meetings
He pledged to spend at least a day a week campaigning outside Westminster, and to hold regular public town hall meetings to give people who were not Lib Dem members, but supported the party, a chance to have their say.
He accused the Conservatives of having "no answers to the big issues" and said Labour was "increasingly exhausted and discredited" - saying it left an opportunity for the Lib Dems.
You win some you lose some, it was a close-run thing
Chris Huhne
Huhne hails Clegg
"I want the Liberal Democrats to be the future of politics, because Liberal Democrats have the courage to imagine a better society to break the stifling grip of the two party system for good.
"To bring in a new politics, of politicians who listen to people, not themselves. No more business as usual. No more government knows best.
"I want today to mark the beginning of a real change in Britain. The beginning of Britain's Liberal future."
Third leader
Mr Huhne thanked everyone involved in his campaign and said he looked forward to working with Mr Clegg - whom he praised for his warmth, intelligence and energy.
Clegg, together with Huhne and Cable, could make an effective team
BBC political editor Nick Robinson
Read Nick's thoughts in full
He said there was inevitably an "in-built abrasiveness" to leadership contests, but said the contest had got the party's message across and he was sure he and Mr Clegg would go on working well together.
Mr Clegg is the party's third leader in two years - Charles Kennedy quit in January 2006, forced out by a frontbench rebellion after admitting a drink problem. Sir Menzies resigned in October, blaming an age-obsessed media.
HAVE YOUR SAY I voted for Nick but, to be honest, I found it hard to see the difference between him and Chris
T, UK
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Sir Menzies said Mr Clegg had shown in his speech he had the drive and ability to take the party forward, adding: "It's a day for looking forward, not for looking back."
Nick Clegg has came out first in the race to become the new leader of the Liberal Democrat Party, the third largest party in the United Kingdom.

Clegg congratulated Vincent Cable on his performance as acting leader of the Liberal Democrats, which he took after the resignation of Menzies Camp

He beat Chris Huhne in the party's election, although the number of votes was very close - Nick Clegg had just 511 more votes than Huhne.

During his acceptance speech he said "I want the Liberal Democrats to be the future of politics," and that he hoped his leadership of the Liberal Democrats would be about ambition and change. He also acknowledged that it was a close contest. His acceptance speech took place in a central London hotel. 

In his speech he also criticized the Labour and Conservative parties by saying they were mutating in to one party and encouraged unsatisfied voters to vote for the Liberal Democrats.