Williams will switch to Renault engines next year, reviving a partnership that brought the struggling team their greatest success in the 1990s.
Williams have signed a two-year contract to use Renault engines in 2012 and 2013, ending their relationship with independents Cosworth.
The Williams-Renault partnership won four drivers' and five constructors' championships between 1992 and 1997.
These included titles for Nigel Mansell, Alain Prost and Damon Hill.
Williams have plummeted some way from those heights. They have not won a race since 2004 and are lying ninth in the championship this season, ahead only of the teams that joined the sport for the first time in 2010.
Team principal Sir Frank Williams said: "Our previous relationship with Renault was one of the most successful in Williams' history but we will not allow ourselves to dwell too much on the past.
"We must look to the future and continue to re-build our on-track reputation, which I am hopeful that this announcement will help us to do."
“Together we believe we can return Williams to our former competitiveness”
Adam ParrWilliams chairman
Renault won the world championship last year as Red Bull's engine supplier, and its F1 president Bernard Rey said that the new deal "reiterates how determined the team is to achieve results, which matches perfectly with our own objectives".
Rey added: "Of course there's also a great pride in reviving the Williams-Renault name.
"Together, we produced racing cars that are recognised for their technical innovation and it is still Renault's most successful period in F1 to date.
"It's a hugely exciting opportunity for both Renault and Williams."
Williams F1 chairman Adam Parr said the team were already "working on an extension" of the contract for 2014, when a new engine formula will see turbo-charged 1.6-litre V6 engines with extensive hybrid technology replacing the current normally aspirated 2.4-litre V8s.
Parr added: "We constantly put pressure on ourselves to improve our performance regardless of expectations.
Hill predicts Renault-Williams 'spark'
"We're not satisfied with just finishing races or picking up a few points, our aim is to win and we want to put ourselves back in a position to do so.
"Clearly our performance at the moment is not where would like it to be, but we are doing all we can to rectify that and this partnership is another step in that process. This partnership is about the future. In a sense, it is about earning the right to inherit the past."
Parr added: "Renault is serious about success and so are we.
"They compete in Formula 1 because it's at the cutting edge of developing technologies and because it is the pinnacle of motorsport.
"This is also why we compete in the sport and together we believe we can return Williams to our former competitiveness."
The Williams contract brings the number of teams Renault supplies in F1 to four, including Team Lotus and the Renault team, in which the French manufacturer no longer has any equity.
Until this year, engine manufacturers could supply a maximum of three teams, but governing body the FIA has now approved them having four partners.
Williams have had their worst start to a season in their history this year and the disappointment has led to major changes in the team.
Technical director Sam Michael has resigned and will step down at the end of the season. Head of aerodynamics Jon Tomlinson has also quit the team.
Former McLaren and Ferrari designer Mike Coughlan, who was at the centre of 2007's 'spy-gate' scandal, has joined as chief designer.
In addition, the team was floated on the Frankfurt stock exchange earlier this year, although Sir Frank Williams remains in overall control.
It has been reported that his long-term partner Patrick Head, is to retire, but this is inaccurate. Head will stay on as a board member and shareholder.
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