The decision strengthens Fallon's relationship with Cadbury, having already secured work for its Bourneville Deeply Dark variety and its Green & Black's chocolate portfolio last year.
There has also been speculation that Fallon is working on a secret brief for a range of new products for the UK market from its "healthy" Australian sweets brand, The Natural Confectionery Company, which it acquired in 2003.
Cadbury's refused to reveal details about the new brief, for which Fallon will produce a brand advertising campaign. Fallon was unavailable for comment.
A spokesman for Cadbury's said: "Cadbury Trebor Bassett can confirm that it is working with Fallon on project development for Cadbury Dairy Milk.
"Fallon is part of the Publicis group who continue to handle a range of our brand advertising campaigns including new and exciting executions planned in the coming months."
Publicis handles creative duties for a number of Cadbury's brands including Crunchie, Flake, Time Out and the Milk Tray Range. It recently produced a nationwide campaign for Flake following a five-year break in advertising.
The TV ad, which featured Australian model Alyssa Sutherland as the Flake girl in a sequence shown in reverse, has become one of the most memorable and creative ads of the year so far.
Publicis declined to comment on Fallon's appointment to the Dairy Milk brief.