The Child Exploitation and Online Protection (Ceop) agency will become part of the new National Crime Agency, Home Secretary Theresa May said today.
Ceop's previous head Jim Gamble resigned in protest over the planned move and said the shake-up was driven not by child protection but by a desire to cut the number of quangos.
But the Home Office insisted Ceop would retain its "unique brand, model and operational control" and would keep a separate budget.
Crime Prevention Minister James Brokenshire said: "Child protection is an absolute priority for this Government.
"As a core part of the new National Crime Agency, Ceop will not only be in the best possible position to continue its vital work but will also benefit from being able to draw on the resources and support available across the whole agency.
"Ceop has been an amazing success and this Government will always back its vital work."
But Mr Gamble, who quit in October after the change was announced, described it as a "mistake for child protection".
Speaking at the time, he said he would "rather resign now and highlight what I believe is a mistake for child protection than find myself resigning in two or three years' time because something had gone horribly wrong and we'd made serious errors".
More than 250 high-risk sex offender networks have been dismantled through Ceop's work, more than 620 children safeguarded and 1,131 people arrested since Ceop was set up in 2006, tasked with tracking online paedophiles and bringing them to court.
It is currently affiliated to the Serious Organised Crime Agency (Soca).
The announcement comes ahead of the publication of an independent review of child protection by Professor Eileen Munro.
Last week, four men admitted running an international paedophile ring that distributed millions of indecent images and films of children to over 40 countries around the world.
Ian Frost, 35, and his partner Paul Rowlands, 34, Frost's brother Paul, 37, and 32-year-old Ian Sambridge pleaded guilty at Nottingham Crown Court on Friday to various charges of making, distributing and possessing indecent images of children.
Lincolnshire Police led the investigation, codenamed Operation Alpine, after receiving the intelligence via Ceop.
The force said smashing the ring had resulted in 132 children in the UK being protected and safeguarded, and a number of paedophiles being taken out of positions of trust, including teachers, doctors, youth workers and police officers.