The Sky service will begin on January 1 2005 and includes unrestricted access to Sky's existing 24-hour operation consisting of eight regional and seven international bureau including: Washington; Moscow; Jerusalem and Delhi.
News anchor Kirsty Young will continue to present Five's flagship bulletins at 5.30pm and 7pm but from a purpose built, state-of-the-art studio in West London.
Five said the break from ITN was a difficult one, but it said the change was needed.
Chris Shaw, Five's senior programme controller, said: "Sky News is an award-winning, proven news service. It was a difficult decision to move from ITN, which has done a fantastic job over the past seven years, but this will mean a bigger, better news for our viewers."
Last month, Brand Republic reported that Five was to lobby the media watchdog Ofcom for permission to dump its primetime 7pm news show after failing to sell enough advertising for the slot.
The move was predicted last year when there was speculation that Five could ditch ITN as its news service for SKy if major shareholder ITV was allowed to take control.
Carlton and Granada were given the go ahead to take control of ITN by the Communications Act prior to their merger.
Five already had a deal with Sky News for providing Five's early morning news bulletin. That deal, signed in 2001, sees Sky News's morning news programme Sunrise simultaneously broadcast on the UK's fifth terrestrial broadcaster.
Nick Pollard, head of Sky News, said: "We are delighted that Sky News has been awarded the Five News contract and thank the channel for the confidence it has in our service. Our work for Five will draw on new and existing resources and reflect all the authority and dynamism displayed by Sky over the past 15 years."
In August it was reported that the BBC had been invited by Five to submit a bid to produce its news programming.
The BBC was asked to supply a bid in competition with ITN, whose contract with Five ends this year. However, it is not believed the BBC submitted a bid.
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