The news was rushed out on Monday following a leak and surprised many observers, although Virgin claimed it had been years in the planning.
Virgin Media says it will shortly announce an "impressive" line-up of content for the channel, due to launch in the autumn under managing director Jonathan Webb.
Webb said: "Virgin 1 will shake up multi-channel and free-to-air TV, and start liberating viewers from the linear schedule. It will be a creative tour de force and a cutting-edge example of any time, any place content."
Media agencies welcomed the move, which follows an ongoing row with rival broadcaster BSkyB that has seen channels including Sky One withdrawn from the Virgin platform.
Universal McCann head of TV Richard Oliver said: "It makes sense strategically to put forward an offer like that. It will be interesting to see what programmes will draw people to that channel and give it a flavour that's different from Sky One - plus what marketing machine there will be to make people aware of that."
Phil Wise, head of broadcast at Mediaedge:cia, added: "It's good for (sales house) IDS. It gives them a lot more impacts to sell, as it's on Freeview. It's Virgin protecting its position in the battle against Sky. It makes them less vulnerable against bullying."
Virgin Media denied the channel was simply a replacement for Sky One. A spokesman said: "It's a very different proposition."
Virgin 1 will be "packed full of top drama, comedy and compelling factual programming", according to Virgin, and herald a "new brand of witty, risky and passionate entertainment never seen before on Freeview".
The new channel will complement Virgin Media TV's pay-TV portfolio, which includes Living, Bravo, Challenge and Trouble.
Virgin 1 builds on the track record of Ftn as Virgin Media TV's free-to-air channel, with Ftn rebranding to take the Virgin 1 name on the electronic programme guide. It will broadcast for 12 hours (6pm to 6am) on Freeview, with a 24-hour schedule on Virgin Media and satellite.
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