The Conservative-Lib Dem coalition government revealed plans to abolish the UKFC in July, sparking outrage from those in the UK film industry.
The BFI will take control of the £15 million lottery funding in April 2011 and administer the £100 million tax incentive. BFI chairman Greg Dyke said that he hopes to boost the funding to £18 million in the coming year.
"It makes sense for there to be a single voice for film in this country - and that's going to be us," he said. "We can certainly do it significantly cheaper... how much cheaper, we don't know yet. The UK Film Council carried quite a large overhead."
Vaizey said that he hoped the move would help build on the success of the British filmmaking industry.
"Despite the success, we cannot be complacent," he commented. "The goal of a sustainable, independent British film industry remains as elusive as ever."
Film London, to be headed up by BAFTA chairman David Parfitt, will be tasked with attracting Hollywood productions to the UK.
"The key thing for us is that the money is still there and there is a promise to increase it and also a guarantee of the long-term future of the tax credit," Parfitt said. "Those are the things that the industry really wanted to hear."