The Labour MP made the statement last night following further disclosures in the News of the World about his private life.
"Having discussed the matter with my wife, however, and in order to put a stop to the intolerable stream of lurid and inaccurate stories, I am left with no alternative but to confirm that I am, and have been for some time, bisexual."
Mr Davies, who is married with a teenage daughter, resigned from the Government last year after "a moment of madness". He left Clapham Common with a stranger and was robbed at knifepoint in Brixton.
He had refused to discuss his private life until now. But in November, after his resignation, he told MPs "We are what we are". This rephrasing of the gay pop anthem "I am what I am" was viewed as an admission that he was bisexual.
The Labour Party refused to comment on the latest allegations. "It's a private matter,' said a Labour Party spokesman.
Mr Davies, the chairman of the economic development committee in the Welsh Assembly, was passed over for a job in First Secretary Alun Michael's team. Before his resignation he had been widely expected to become First Secretary.