"Yes, I proposed to her. ... It was early this morning at the Eiffel Tower, so I haven't slept at all," said Cruise.
"Today is a magnificent day for me, I'm engaged to a magnificent woman," he added.
Cruise proposed after a candlelit dinner at Le Jules Verne restaurant at the Eiffel Tower around 12:30 a.m., Entertainment Tonight reports on its Friday broadcast.
Asked why he chose the famed Paris landmark, Cruise answered: "I've never been to the Eiffel Tower. It's Paris, it's a beautiful city, it's very romantic."
Wearing a black denim jacket over a black T-shirt, Cruise arrived at about 10:22 a.m. Paris time, with Holmes, sporting a black top, behind him.
In the course of the conference, Cruise and Holmes never touched but repeatedly made happy faces. (Cruise's sister and publicist, Lee Anne Devette, sat with them.) Holmes's ring, which Cruise said he bought "a while ago," had a tear-shaped diamond.
Asked by PEOPLE privately if they plan to have children, Holmes paused and then said, "Yes," as both she and Cruise broke into smiles. (Holmes, however, did not speak during the press conference.)
More on Tom & Katie
When told by reporters that he seemed like a changed man, Cruise replied: "It's definitely love and France. I've never felt like this before. She's an extraordinary woman and I love her very much. My family is doing well and I'm just very happy. Then you come to Paris ... But it's definitely Katie."
He then added to TV's The Insider: "I'll be jumping on couches for a very long time."
Cruise, 42, and Holmes, 26 – who left the Paris press conference to board a train for Marseilles, for another War of the Worlds premiere – first announced their relationship in April, with both of them declaring their love at press conferences and in TV appearances.
In May, Cruise's behavior on Oprah Winfrey's sofa – jumping up and down – prompted the host to declare, "The boy is GONE."
"I'm in love! I'm in love," Cruise yelled, throwing his hands in the air. "I can't be cool. I can't be laid-back. It's something that has happened, and I feel I want to celebrate it. I want to celebrate her. She's a very special woman."
He and Holmes began dating after Cruise split from actress Penelope Cruz, and Holmes and actor Chris Klein called off their long-standing engagement. Cruise was previously married to actresses Mimi Rogers (1987-90) and Nicole Kidman (1990-2001), with whom he adopted two children.
As the new relationship developed, Holmes started to profess an interest in her boyfriend's religion, the Church of Scientology. This week, PEOPLE reports that wherever Holmes goes, Jessica Rodriguez – an employee of the controversial church – is never far behind.
Though a source close to Holmes says that Rodriguez is traveling as a friend and assistant and not as a religious adviser, the blossoming friendship was perceived to indicate that Holmes was getting more serious about Cruise and more deeply involved in Scientology.