The Secretary of State for Scotland, Michael Forsyth, said that the Queen had agreed the stone should be placed in the Crown Room at the castle which was ideal because of its accessibility, security and "appropriate historic links".
The relic - also known as the Stone of Destiny - will arrive at the castle on St Andrew's Day in November but will return to Westminster Abbey for future coronations where it has been used in the crowning of some 30 British monarchs.
The stone is the most ancient and potent symbol of the Scottish kings and there have been countless campaigns demanding its return. It was originally used as a coronation throne by the Irish Kings of Tara and taken to Scotland when the Irish invaded the land of the Picts in the ninth century.
However, there was disappointment last night among those whose attempts to receive the stone were unsuccessful. There were more than 17 suggested locations, including Dunfermline and Arbroath abbeys, as well as the relic's original resting place at Scone in Perth.
The Earl of Mansfield, whose family has lived at Scone Palace for 400 years, was one of several thousand people who campaigned for the stone to be returned there.
The earl's spokesman, Commander Andrew Robinson, said: "There is no historical link between Edinburgh and the stone. Edinburgh did not even exist as a village when the stone went south, let alone have a castle. There is no historic connection."Reuse content