Mr Shorten won with 63.9 per cent of the caucus vote and 40 per cent of the members vote for an overall total of 52 per cent.
"Proud to announce that BillShortenmp has been elected the new #LaborLeader!" tweeted the ALP.
Caucus backs Shorten over Labor faithful
Bill Shorten will lead Labor to the next federal election after winning a historic ballot of the caucus and party rank and file.
The new leader of the federal parliamentary party won the caucus vote convincingly 55-31, but the wider membership backed Anthony Albanese 60-40 per cent.
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When the two tallies were weighted against each other, Mr Shorten had 52 per cent of the vote.
Interim Labor leader Chris Bowen predicted Mr Shorten would go on to become the next Labor prime minister of Australia.
"Bill Shorten is a man who has dedicated his working life to representing vulnerable people and to representing this nation," he told reporters in Canberra on Sunday.
Mr Bowen also paid tribute to Mr Albanese, saying he still had a "significant contribution" to make in parliament.
The caucus will meet on Monday to elect a deputy leader, likely to be Tanya Plibersek, and shadow ministry.
The size of Mr Shorten's caucus vote margin surprised many observers who had expected a closer contest.
But it's clear some Left faction MPs deserted Mr Albanese to back Mr Shorten, a major figure in the Victorian Right faction.
As expected, Mr Albanese convincingly won the backing of the rank and file.
Former prime minister Julia Gillard was quick to congratulate the new Labor leader, despite his controversial role in her dumping in June.
"Congratulations to Bill Shorten on becoming Labor leader. A great honour! I wish Bill all the best. JG"
Mr Bowen said Mr Shorten had already been introduced to the public through the Labor leadership process, giving him an advantage over previous opposition leaders.
Mr Shorten, 46, entered parliament in 2007 when Labor won government from the coalition.
Before that he was national secretary of Australian Workers Union, coming to public prominence as the public face of the Beaconsfield Mine disaster.
In government Mr Shorten was a minister for workplace relations, education, financial services, superannuation and assistant treasurer.
He was responsible for the initial steps the Gillard government took to establish the national disability insurance scheme.
But his role as one of Labor's so-called "faceless men" was instrumental in the downfall of two prime ministers - Kevin Rudd in 2010 and Julia Gillard in 2013.
