The four-piece will join the likes of Pet Shop Boys, Paul Weller, David Bowie, Robbie Williams and Oasis, who have been presented with the accolade in the past.
Frontman Damon Albarn said in a statement: "It's great to have recognition for all the work and all the heartache and all the joy that's gone into this band."
Guitarist Graham Coxon added that it was "always nice" to be honoured with a Brit Award. The band scooped four Brits in 1995 - 'Best British Band', 'Best British Single' and 'Best British Video' for Parklife, and 'Best British Album' for the record of the same name.
Brit Awards chairman David Joseph described Blur as "a seminal British band who have long been worthy Outstanding Contribution winners", adding: "Their contribution to British music is immense."
Originally established in 1989, Blur's mainstream success peaked in the mid-1990s off the back of Parklife and its follow-up album The Great Escape.
The band took a hiatus in 2003 to pursue solo projects and reformed in 2009 to play a number of high-profile shows including the headlining slot at that year's Glastonbury Festival.
It has not yet been confirmed if the band will close the ceremony, following the tradition of most previous recipients.
The Brit Award nominations will be announced on January 12, 2012. The ceremony, which is to be hosted by James Corden for the third time in four years, will be held at The O2 on February 21, 2012.
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Watch Blur's performance of 'Tender' from Glastonbury 2009 below: