The three boards met in Mumbai to discuss the rules and regulations of the tournament, which is due to be staged in India in October and competed for by the leading eight Twenty20 domestic teams in the world.
The agreement effectively ends England's hopes of staging a rival Champions League competition and will almost certainly force the England and Wales Cricket Board to reach agreement with India or face exclusion from the Champions League riches.
The Board of Control for Cricket (BCCI) in India have already stated they have no objection to Middlesex, the Twenty20 Cup winners, from entering the Champions League but are not prepared to accept finalists Kent because of their Indian Cricket League players Justin Kemp and Azhar Mahmood.
England had hoped to organise a rival competition in Abu Dhabi, financed by the Abu Dhabi royal family, and persuade Australia and South Africa to join their competition.
But today's announcement leaves the ECB facing frantic negotiations with India to ensure their clubs have a presence in the competition, which will be staged between Sept 29 and Oct 8 with eight teams competing for a prize pool of six million US dollars.
Lalit Modi, chairman and commissioner of the Indian Premier League (IPL) and BCCI vice-president, said: "The success of the IPL has undoubtedly captured the imagination of cricket supporters from around the world.
"The Champions Twenty20 League, which will be played by (the) eight best teams from the world which have earned their place through their domestic competitions, provides a new and exciting pinnacle for club championships across the world.
"It will provide teams with the opportunity to earn the title of World Club Champions in a format which will be eagerly anticipated by spectators and players alike. I keenly look forward to the inaugural season of the Champions Twenty20 League in September/October 2008."
The inaugural tournament will initially feature eight teams who will play 15 matches but that number will increase to 12 teams playing 23 matches in 2009.
The eight teams will be divided into two groups of four teams each with the top two teams from each group qualifying for the semi-finals.
James Sutherland, Cricket Australia's chief executive, said: "This fantastic new competition gives our best state cricketers, and their equivalents in other competitions, a chance to pit their skills against champions from other countries.
"I'm also delighted that the benefits of this global event will flow down to state level and enhance cricket at grass-roots level.
"I'm certain it will add a whole new dimension to our own Twenty20 interstate competition and globally, will help us all in winning new fans for cricket around the world."
Gerald Majola, Cricket South Africa's (CSA) chief executive, also welcomed the agreement, saying: "The Champions Twenty20 League is an idea whose time has come.
"I'm certain this competition will significantly enhance the international stature of domestic cricket and pave the way for greater involvement of cricketers, right from the club, province, state and county through to the national and international arenas.
"CSA is proud to be associated with this initiative and we are sure that this event will ignite the passion of cricket lovers the world over, quite along the lines of what we had experienced with both our current Standard Bank Pro20 and the recently held inaugural ICC Twenty20 World Cup held in South Africa last September."
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