The 36-year-old former prison officer sold 149,000 copies of the Demi Lovato cover, more than double that of US rapper Pharrell Williams, who secured the second spot with his track "Happy".
Bailey, who was crowned X Factor winner last week, is splitting all proceeds between Great Ormond Street Hospital Children's Charity and Together For Short Lives, a charity which helps children with life-threatening conditions.
Chancellor George Osborne has agreed to waive VAT on the release.
Bailey told OfficialCharts.com: "Being Number 1 is absolutely amazing.
"It really is the icing on the cake and it means Great Ormond Street Children's Charity and Together For Short Lives will benefit from the single, which makes it extra special."
Despite the annual anti-X Factor campaign, this year led by AC/DC’s 1979 single, "Highway to Hell", Bailey’s track has become one of the fastest-selling singles of the year.
"One More Sleep" by the 2006 X Factor winner Leona Lewis came in third spot and "Highway to Hell" took fourth place, giving AC/DC their first ever top ten hit.
Robbie Williams held on to top spot in the album chart with Swings Both Ways.
The Take That star's record was neck-and-neck midweek with One Direction's Midnight Memories and Gary Barlow's Since I Saw You Last in a tight race.
But Williams beat off One Direction by less than 200 copies after both acts sold more than 126,000.
Past Christmas number one singles
Past Christmas number one singles
1/15 2013: Sam Bailey – 'Skyscraper'
This year’s X Factor winner sold 149,000 copies of her debut single 'Skyscraper', making it one of the fastest selling tracks of 2013. The Demi Lovato cover beat Pharrell Williams’ 'Happy' to claim the top spot and become the sixth Christmas number one to come out of the show’s 10 year stint. The proceeds will go to Great Ormond St Hospital and charity Together for Short Lives.
2/15 2012: The Justice Collective – 'He Ain't Heavy, He’s My Brother'
The Hillsborough tribute single, featuring artists including Robbie Williams and Sir Paul McCartney, raised money for the families of the 96 Liverpool fans who died in a crush at Hillsborough stadium in 1989. The cover of The Hollies’ 1969 hit sold 269,000 copies, beating X Factor winner James Arthur’s single 'Impossible'.
3/15 2011: Military Wives with Gareth Malone – 'Wherever You Are'
2011's festive hit came from 100-strong choir The Military Wives, put together by Gareth Malone for the BBC Two series The Choir. 'Wherever You Are' sold 556,000 copies in the week leading up to Christmas and the lyrics were based on love poems written between the wives and their absent husbands. The Government donated VAT raised on the single to charities supporting servicemen and women.
4/15 2010: Matt Cardle – 'When We Collide'
X Factor winner Matt Cradle sold 439,000 copies of his debut single, despite Facebook-led campaigns to stop the talent contest’s domination of the charts. The original version of Cardle’s song – 'Many Of Horror', by Biffy Clyro – sold about 40,000 copies to secure eighth place in the chart.
5/15 2009: Rage Against the Machine – 'Killing in the Name'
In one of the most dramatic Christmas chart battles in recent years, Rage Against the Machine clinched the top spot after a successful Facebook campaign to prevent The X Factor single securing the Christmas number one for the fifth successive year. 'Killing in the Name' sold 500,000 downloads, 50,000 more than X factor winner Joe McElderry’s 'The Climb'.
6/15 2008: Alexandra Burke – 'Hallelujah'
Leonard Cohen’s track claimed the number one, number two and number 36 spots in the 2008 Christmas chart. X Factor winner Alexandra Burke secured the top spot, selling 576,000 of her 'Hallelujah' cover, while Jeff Buckley’s 2008 version came second. The original 1984 anthem just slipped into the charts at 36. It was the first time two versions of the same song had taken the top two spots since Tommy Steele and Guy Mitchell managed the feat with 'Singin' The Blues', in January 1957.
7/15 2007: Leon Jackson – 'When You Believe'
The then 18-year-old X Factor winner became the third contestant to achieve the coveted Christmas number one. The former Gap sales assistant, who was forced out of his home by his mother just before his X Factor audition, sold 275,000 copies of his debut single 'When You Believe'. Originally recorded by Whitney Houston and Mariah Carey, it was the fastest-selling single of 2007.
8/15 2006: Leona Lewis – 'A Moment Like This'
One of the biggest successes to come out of The X Factor, Leona Lewis started off on a high. Her debut single broke a world record after it was downloaded 50,000 times in 30 minutes and secured the top spot after selling 571,253 copies - outselling the rest of the Top 40 sales combined. It stayed in the top spot for four weeks.
9/15 2005: Shayne Ward – 'That’s My Goal'
The winner of the second series of The X Factor started the ball rolling for a succession of Christmas number ones from the singing competition. Shayne Ward’s debut single sold 742,180 copies after only four days on sale. In the same year, The Pogues' reissued 1987 hit, 'Fairytale of New York', claimed third place.
10/15 2004: Band Aid 20 – 'Do They Know It’s Christmas?'
The second reincarnation of the 1984 song 'Do They Know It’s Christmas?' included artists Bono, Daniel Bedingfield, Coldplay’s Chris Martin and Sir Paul McCartney. The track was released in November, to benefit the Darfur region of Sudan, and became the biggest-selling single of 2004.
11/15 2003: Michael Andrews and Gary Jules – 'Mad World'
In a rather sombre turn, little-known US singer Gary Jules topped the charts with his song composed by Michael Andrews. The cover of the 1982 hit by Tears For Fears beat The Darkness’ 'Christmas Time (Don’t Let the Bells End)', which had been widely expected to give the band their first number one.
12/15 2002: Girls Aloud – 'Sound of the Underground'
Before The X Factor (such a time did exist) there was Popstars: The Rivals. The concept of the programme was to produce a boy band and a girl band, which would compete for the Christmas number one. Girls Aloud triumphed with their debut single 'Sound of the Underground', consigning rivals One True Voice to obscurity in the process.
13/15 2001: Robbie Williams and Nicole Kidman – 'Somethin’ Stupid'
The starry duo claimed the top spot with their cover of Frank and Nancy Sinatra’s 1967 hit 'Somethin’ Stupid'. Taken from Robbie Williams’ album Swing When You’re Winning, the single sold 366,000 copies, making it the best-selling track of 2001.
14/15 2000: Bob the Builder – 'Can We Fix It?'
Perhaps one of the worst Christmas number ones of all time, this adaptation from the BBC children’s programme sold 240,000 copies in one week. Bob, voiced by Neil Morrissey, co-star of Men Behaving Badly, managed to knock US rapper Eminem off the top spot with his light-hearted tune.
15/15 1999: Westlife – 'I Have a Dream”/ “Seasons in the Sun'
The Irish boy band outsold festive favourite Cliff Richard’s single 'The Millennium Prayer' with their double A-side single featuring covers of the Abba song 'I Have a Dream' and Terry Jacks' 1974 number one 'Seasons in the Sun'. They become the second act to go straight to number one with their first four singles in the week they were released.