Wales will get the power to pass its own laws, putting it on a par with Scotland and Northern Ireland, following strong backing for the proposal in a referendum.
Carwyn Jones, the Welsh First Minister, described the result as an historic moment for Wales after 517,132 people (63.5 per cent) voted in favour, compared with 297,380 (36.5 per cent) who were against.
Twenty-one out of 22 constituencies voted in favour of giving the Welsh Assembly in Cardiff the right to legislate without first obtaining approval from Westminster in devolved policy areas such as health, education and transport.
The only No vote came from Monmouthshire, where voters narrowly opposed the move by 50.6 per cent to 49.4 per cent. The leaders of all the parties in the Welsh Assembly had backed the initiative, leaving supporters of a No vote to argue that they were running an anti-establishment campaign.
The turnout was 35 per cent, which was higher than forecast after the campaign failed to catch fire in Wales. Mr Jones said: "This is a historic day for Wales. It is a clear and concise Yes vote across whole of Wales from the coast to the border."
He told supporters: "Today an old nation came of age."
Plaid Cymru, which is in a coalition administration in Cardiff with Labour, said it was delighted at the victory. Its leader, Ieuan Wyn Jones, the Deputy First Minister, said: "To demand respect, you must first display self- respect.
"Today we have done just that, and the rest of the world can now sit up and take notice of the fact that our small nation, here on the western edge of the continent of Europe, has demonstrated pride in who we are, and what we all stand for."
The Welsh Conservative leader, Nick Bourne, whose party is the main opposition in the Assembly, said: "We now have the tools to do the job, but we must deliver."
The Welsh Secretary, Cheryl Gillan, who remained neutral during the campaign, said the Government was determined to make the new arrangements work effectively. She added: "Importantly, the people of Wales have had their say."
However, the No group, True Wales, said it was bitterly disappointed with the result and feared that the principality was "sleepwalking on a path to independence".
Rachel Banner, its spokeswoman, said its campaign had been run by "ordinary members of the public and not politicians interested in grabbing more power".
The new powers are expected to come into force in May. Areas that will remain the responsibility of Westminster will include economic policies, defence and foreign affairs, policing, criminal justice, social security, employment and energy.