The umbrella organisation of the South African, New Zealand and Australian rugby unions which runs the Super rugby and Tri-Nations tournaments released its decision early on Thursday.
The choice of Melbourne over a bid from South Africa's Eastern Cape was made by a two-man panel appointed by SANZAR after members were unable to make an unanimous decision last month on the new venue.
“This is a vote for common sense,” Australian Rugby Union chief executive John O'Neill said in a statement.
“This is the right decision for SANZAR and it's a momentous day for Australian rugby and the people of Melbourne."
The Super 15 will feature five teams from each of the three countries. The competition will be divided into three conferences from 2011, with an intra-conference stage featuring domestic matches followed by an inter-conference stage.
The SANZAR panel, comprising ex-All Blacks captain David Kirk and retired New Zealand High Court judge Barry Paterson, decided that the Melbourne bid would provide “considerably greater” commercial benefit for the competition.
The panel found that the Southern Kings bid from the Eastern Cape was more advanced in terms of development, had a large playing base in a big rugby market and “presented a stronger case than Melbourne as to their rugby readiness."
But it decided on Melbourne because of its location and commercial value for broadcast revenue.
“Melbourne has an extraordinary capacity for sport and we can now deliver them a Super Rugby side they can embrace and support in an established competition of genuine international standing,” O'Neill said.
Melbourne is the traditional stronghold of Australian rules football and is headquarters for the Australian Football League, but there has been growing support recently in the more international football codes.
The National Rugby League has had success pushing into the city, with the Melbourne Storm a regular contender for the premiership, while the Melbourne Victory is also the defending champion in Australia's domestic A-League soccer competition.
Despite backing Perth, on the west coast, over Melbourne the last time the Super tournament was expanded in 2006, the ARU has continued to promote rugby in Australia's second-biggest city and staged regular, important international matches there.
Australia had three teams in the Super 12 competition from 1996 until 2005, based in the rugby hubs of Sydney, Brisbane and Canberra.
“The competition revamp, together with the addition of Melbourne, will give our game an unprecedented presence in the Australian sporting marketplace,” O'Neill said.
Stirrer