While no date has been revealed, it is thought the ceremony will be held in a few months and be the biggest since William's mother, Diana, married Prince Charles.
"Everyone is absolutely delighted. He has never had eyes for any other woman since Kate came on the scene," says an old friend. "She is going to make a wonderful wife, a wonderful princess."
Both the future bride and groom are 28.
The Official StatementThe Prince of Wales is delighted to announce the engagement of Prince William to Miss Catherine Middleton.
The wedding will take place in the Spring or Summer of 2011, in London. Further details about the wedding day will be announced in due course.
Following the marriage, the couple will live in north Wales, where Prince William will continue to serve with the Royal Air Force.