The former Conservative MP, who unsuccessfully sued Granada Television and The Guardian, had offered pounds 840,000 in cash to settle the libel costs but it was rejected.
Mr Aitken's solicitor, Michael Coleman, senior partner at London law firm Harkavys, said his client was "extremely sad" to go into bankruptcy, which would lead to "a long period of uncertainty and difficulty for his family".
Mr Coleman said: "He has asked me to say that having been advised, he came to the conclusion that no option other than bankruptcy was available to him in view of The Guardian and Granada's recent rejection of his pounds 840,000 offer to settle the libel case costs."
The Guardian said last night: "When the case was settled Jonathan Aitken promised to pay 80 per cent of costs. So far he has not paid a penny."
The newspaper said Mr Aitken had "provided a series of unreliable statements about his assets and made only unsecured offers". It claimed the former minister had assets "well in excess" of pounds 2.5m, that he was living off pounds 11,000 a month and owned a house worth pounds 1.75m.
Aitken will be sentenced next month after admitting he lied under oath and drafted a false witness statement for his daughter Victoria, then 18, in an attempt to back up his lies during his battle with The Guardian and Granada.
He began his fated libel action two years ago after reports that prominent Saudi Arabian friends had paid for his visit to the Paris Ritz in 1993, when he was serving as minister for Defence Procurement.
He resigned as First Secretary to the Treasury to fight the legal battle, famously declaring at a press conference that the "sword of truth and trusty shield of fair play" would bring him victory in court.
Weeks before the High Court hearing he reportedly rejected a secret peace deal offered by The Guardian, confident he would win. But the trial collapsed, leaving Aitken with a pounds 2.4m bill for costs and his reputation in tatters. He will be sentenced at the Old Bailey next month.
Detectives investigating Aitken, who lost his Thanet seat at the general election two years ago, interviewed Miss Aitken but a decision not to prosecute her was taken last August.
The Guardian and Granada will now have to pursue their claims for costs through the Trustee in Bankruptcy, with Aitken's other creditors.Reuse content