Sir Keith has been tasked with working with the Department for Culture, Media and sport (DCMS), Sport England and UK Sport to merge both organisations into one single body, a process due to be completed by April 1, 2013.

The appointment of Sir Keith, 60, as chairman of the Project Board has been hailed as a major coup by Sports and Olympics Minister Hugh Robertson.

"It is fantastic to have Sir Keith Mills as Chair of the Project Board," he said.

"His unparalleled business experience, combined with a detailed knowledge of our sporting landscape, means he is the perfect person to oversee this work.

"The structure of sport in this country must be rationalised and, going forward, it does not make sense to have two organisations, operating out of different and expensive central London locations with the associated administrative costs. "I also want to capture the commercial opportunities generated by London 2012 to sport thereafter.

"I have no doubt Sir Keith will manage this with his customary expertise."

Sir Keith is a self-made millionaire who developed the air miles scheme for British Airways before launching the Nectar loyalty programme.

He was a driving force in Britain's successful bid for the Olympics and Paralympics and is now the vice-chairman of London 2012.

He is now a non-executive director of Tottenham Hotspur and owns two yacht racing teams, TEAMORIGIN, which was established to compete as Britain's entry in the America's Cup, and AT Racing, which competes in ocean races with Hugo Boss sponsorship.

He was also involved in England's disastrous campaign to host the 2018 FIFA World Cup.

"I look forward to helping drive through the merger of UK Sport and Sport England," said Sir Keith.

"My priority will be making sure this happens as smoothly as possible, to ensure UK Sport and Sport England can focus on the crucial work they are carrying out in the run up to the London 2012 Games, in supporting our elite athletes and funding grassroots sport respectively.

"We would like to see the new merged organisations provide even stronger support for sport post 2012."

Sir Keith's main responsibilities will be to ensure the project delivers a merged body that incorporates the current responsibilities of Sport England and UK Sport for community and elite sport respectively, while maintaining distinct English and UK funding streams, which deliver even more value for money for the Government and the public.

He will also ensure that the perspective of stakeholders including the devolved administrations, Home Country Sports Councils, sport's national governing bodies, local authorities and other organisations with a significant role in the delivery of sport is properly considered during the formation of the merged organisation.

Sir Keith's appointment was welcomed by Richard Lewis, the chairman of Sport England.

"Sir Keith's appointment is excellent news and very welcome, particularly given the extensive sporting knowledge and expertise that he brings alongside his vast business experience," said Lewis.

"[Sport England chief executive] Jennie Price and I look forward to working with him to secure the best possible outcome for sport as a whole, building on the progress which is being made at both a community and elite level."

Baroness Sue Campbell, Chair of UK Sport, also backed Sir Keith's new role.

"UK Sport is pleased to have Sir Keith Mills working alongside us to oversee the merger with Sport England," she said.

"His vast experience and understanding of the sporting landscape will be invaluable to us as we look to shape the merged organisation in the best interests of British sport, while allowing us to maintain focus on delivery at this crucial time for elite and grass roots sport in this country."

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