Transport Secretary Justine Greening tabled a written ministerial statement in Parliament and told MPs it was time Britain updated its Victorian railways for the 21st Century.
Residents booed when hearing her statement, with many outraged that more than half the route will be mitigated by tunnels, damaging natural reserves.
The new HS2 project will cut journeys between the two cities from the current time of one hour and 24 minutes to just 49 minutes.
But the London to Birmingham segment is expected to cost £17bn and extending it to Manchester and Leeds a further £15bn.
“High Speed 2 is a scheme to deliver hugely enhanced rail capacity and connectivity between Britain’s major conurbations,” said Ms Greening.
“It is the largest transport infrastructure investment in the UK for a generation, and, with the exception of High Speed 1, is the first major new railway line since the Victorian era.”
The Transport Secretary said she had been “mindful that we must safeguard the natural environment as far as possible, both for the benefit of those enjoying our beautiful countryside today and for future generations”.
The route, which cuts through areas of outstanding natural beauty, has provoked criticism from locals.
One of those areas is The Chilterns in Buckinghamshire, where residents have organised a campaign group to fight the proposals.
“When schools are closed, teachers are losing their jobs… it is just unviable,” said resident Alison Kenny.
“I can’t believe we’re still here having this conversation and the Government is still going ahead. It’s just a vanity project. It’s nothing more.”
Steve Roddick, chief officer of The Chilterns Conservation Board, said: “It looks like this is all about how do you get to London more quickly.
“It’s absolutely not the way to provide prosperity in the Midlands and the North, to make all these great cities suburbs of London. And that’s the way it begins to look.”
The plans have also divided politicians with Welsh Secretary Cheryl Gillan, who represents affected Chesham and Amersham, previously threatening to quit over the issue.
Homes in rural Conservative seats are among the hardest hit by the plans.
As a compromise, Ms Greening announced extra tunnelling on some parts of the route including Amersham, Ruislip, Greatworth, Aston le Walls, Wendover and Long Itchington Wood.
Trains are expected to start running along the new line in 2026. It will then be extended in a Y-shape to serve Leeds and Manchester, with reduced travel times to Liverpool and Glasgow by 2032.
The Department for Transport said: “HS2 is not just about getting between London, Birmingham, Leeds and Manchester more quickly, but bringing faster services and many more seats to towns and cities well beyond the HS2 network.
“It would work just like a motorway. No-one uses a motorway to get all the way from their front door to their final destination, but they use it because it offers high capacity and faster services – precisely what HS2 will offer rail passengers.”
Union leaders and business leaders have supported the project, arguing that it will be a boost to the economy and help bring the country’s rail network up-to-date and in line with international competitors.
The proposals still need to be approved by Parliament, but today’s announcement by Justine Greening is a major step towards implementation.
Lucy James from the Campaign for High Speed Rail welcomed the move and said it would deliver “more seats, more trains, more jobs and more growth” for Britain.
Former transport secretary Lord Adonis told Sky News the Government must also give a firm commitment the line will be extended to Leeds, Manchester and beyond.
“The Government really must get a move on – it is nearly two years since I announced the high-speed plan, they spent two years consulting, a consultation which could have taken six months,” he said.
Lord Adonis said he supports “proper compensation” for residents directly affected.
“The rule with high speed rail is everyone wants the stations but no one wants the lines, well the line has to go somewhere so ultimately the Government has to take the decision,” he added.