The British Formula One Grand Prix is to move from Silverstone to Donington from 2010, it has been announced.
The race's traditional home is owned by the British Racing Drivers' Club, who had been in talks for a new deal with Formula One boss Bernie Ecclestone.
"We wanted a world class venue for F1 in Britain, something that the teams and fans could be proud of," he said.
"Donington's development plans will give us exactly that, a venue to put British motorsport back on the map."
Ecclestone said he was disappointed that the government had not intervened to help Silverstone retain the race.
"I am sorry that we could not have helped Silverstone to raise the money to carry out the circuit improvements and run F1," he said.
"I believe that the government should have supported them which would have cost probably less than .002% of the government's commitment for the Olympic Games."
Max Moseley, the president of international motorsport's governing body the FIA, said he was glad that the future of the race had been secured.
"After many years of patient but fruitless negotiation with the BRDC, we are delighted that Bernie has nevertheless been able to ensure that the British Grand Prix will keep its place on the F1 calendar," he said.
"We understand that the development programme planned for Donington will achieve the very high standards we expect from a modern F1 circuit.
"Finally, British fans will get the venue they deserve."
Donington Park last hosted F1 in 1993, when Ayrton Senna drove one of his greatest races to win what was called the European Grand Prix.
The track has a history with F1 that dates back further than Silverstone's - the first Grand Prix at the track was in 1935, and it held races there until the outbreak of the second World War, famously hosting the battle between the Silver Arrows of Mercedes and Auto Union (the fore-runner of Audi) in 1937 and '38.
But it will need a huge overhaul to come up to F1's standards.
The track will need lengthening, and while Silverstone's facilities have been consistently criticised by Ecclestone, Donington's are currently nowhere near the standard of those at the Northamptonshire track.
Many more millions will need to be spent at Donington to bring its facilities up to F1's standards than would have been needed at Silverstone.
The track is well served by transport links. It is next to East Midlands airport, and about two miles from the M1 motorway.
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