Royal officials said they got engaged last month during a vacation in Kenya. Prince William gave Middleton the engagement ring once worn by his late mother Princess Diana, an oval blue sapphire surrounded by diamonds from the jeweler Garrard.
"This was my way of making sure that my mother didn't miss out on today," Prince William said as the couple posed for photographers in the state apartments at St. James' Palace.
Speaking publicly for the first time about their relationship and now engagement, Prince William said in a televised interview they are "Massively excited."
Prince William met Middleton while they were students at the University of St. Andrews in Scotland more than eight years ago. They are both 28 years old.
The couple admits the strains that accompany royal life can be a struggle, and that is why they chose to take their time.
Prince Charles' office says the heir to the throne is delighted with the news. They are due to marry next spring or summer in London.
Middleton's every move has been monitored by the media for years. That scrutiny may only become more intense once she has the legacy of England's beloved Princess Diana to live up to.
Officials say after the marriage, the couple will live in North Wales, where William, who's second in line to the throne, will continue to serve with the Royal Air Force.
Middleton and William's first child would move ahead of his younger brother Prince Harry to become third in line to the throne.
A billion people watched Prince Charles and Lady Diana marry in a fairy tale ceremony 30 years ago.
Royal experts say Prince William and Middleton's wedding will likely rival that of his parents in both pomp and popularity.
The Associated Press contributed to this story.