Elizabeth died at her Balmoral castle in Scotland on September 8 in 2022 after more than seven decades on the throne.
At 96, she was the nation's oldest and longest-reigning monarch, and her death provoked days of mourning and poignant tributes from across the country and the world.
The government said the Queen Elizabeth II Memorial would be created in a site in St James's Park, adjacent to the famous Mall boulevard at Marlborough Gate, and land surrounding the pathway down to the lake, including the Blue Bridge.
The location, selected by a memorial committee, was chosen because of its proximity to Buckingham Palace, the headquarters of the Commonwealth, the international body she played a major role in establishing, and to statues of her parents, King George VI and Queen Elizabeth, the Queen Mother.
"Queen Elizabeth II’s enduring legacy of service and devotion to our country will never be forgotten," Prime Minister Sir Keir Starmer said in a statement on Saturday.
The government said the memorial was intended not just to be a fitting monument on a scale to match the queen's contribution to national life, but also a space for contemplation and community.
"The Mall and St James's Park at the ceremonial heart of our capital provides a location closely identified with so many events of the late Queen's life," said Robin Janvrin, a former private secretary to the late monarch and chair of the memorial committee.
"It is a fitting site for the national memorial in her honour to remember and celebrate her extraordinary contribution to our lives throughout her long reign."
The government said architects, artists and designers would be invited to submit proposals for the design of the memorial site later this year.
Chancellor of the Duchy of Lancaster Pat McFadden said the final design will be unveiled in 2026 to coincide with what would have been Elizabeth's 100th birthday year.
