"This announcement is tremendous news," said 1996 F1 world champion Damon Hill who is president of the British Racing Drivers Club president (BRDC), "It's not easy to enter into an agreement of this magnitude. It's a big commitment.

"But the BRDC felt we wanted this relationship to continue, and we were prepared to back the negotiating team, with the level of risk satisfactory for the deal to go ahead."

Bernie Ecclestone said: "This will ensure the British Grand Prix is included on the Formula 1 calendar for many years to come, which is something I've always wanted to happen."

"It's brilliant news. I always assumed it would happen in the end because everyone wanted the same thing. The new circuits are exciting and interesting but they always had to balance up with the historic circuits, like Silverstone."

Silverstone managing director Richard Phillips said: "We've always had five-year deals and never been able to get the investment we needed to redevelop. But 17 years gives us the ability to invest and move forward.

"We've always had the belief the British Grand Prix was an important cornerstone of Formula One but, with Bernie, you're never quite sure, at the end of the day, though, you have to have a British Grand Prix."

Silverstone has been the front-runner to stage the race after Ecclestone ruled out Donington Park’s chances of hosting the race in October. The company re-developing Donington failed to show it had the £135 million funding required.