The singer - best known for her power ballad 'Total Eclipse of the Heart' and 'Holding Out for a Hero' from the original Footloose movie - will perform a new track named 'Believe In Me' from her forthcoming album Rocks and Honey at the annual competition in Sweden.
Tyler - who follows in the footsteps of last year's entrant Engelbert Humperdinck - said in a statement: "I am truly honoured and delighted to be able to represent my country at Eurovision, and especially with such a fabulous song.
"I promise to give this everything that I've got for the UK!"
Katie Taylor, BBC controller of entertainment and events, added: "Bonnie Tyler is truly a global superstar with a fantastic voice, and we are delighted she will be flying the flag for the UK in Malmö."
'Believe In Me' was written by Desmond Child, Lauren Christy and Christopher Braide, and is produced by David Huff.
A unnamed Eurovision expert told The Mirror: "She should be one of our strongest contestants in many years - her live vocal ability is tried and tested.
"Bonnie could easily finish in the top 10 with this power ballad. She has decades of experience so should be able to pull this off with aplomb."
The 58th annual Eurovision Song Contest will take place in Malmö between May 14 and 18. Tyler will release Rocks and Honey on May 6.
Watch Bonnie Tyler's music video for 'Total Eclipse of the Heart' below:
Eurovision Song Contest final 2012 - Photo gallery: