UK foreign secretary Philip Hammond has signed a landmark deal under which UK will spend £15 million to set up the base in the Mina Salman Port in Bahrain.
The base will host ships including destroyers and aircraft carriers with Hammond saying it is, "just one example of our growing partnership with Gulf partners to tackle shared strategic and regional threats.''
UK said it was an "expansion of the Royal Navy's footprint" and would "reinforce stability" in the Gulf.
Hammond signed the new defence arrangement with Sheikh Khalid bin Ahmed bin Mohammed Al-Khalifa, Bahrain's foreign minister in the presence of prince Salman Bin Hamad Al-Khalifa.
The arrangement will improve onshore facilities at the Bahrain Defence Force (BDF) Mina Salman Port in Bahrain, where the UK has four mine-hunter warships permanently based and from where British destroyers and frigates in the Gulf are supported.
Under the arrangement, the UK is planning to bolster the existing facilities at the port, providing the Royal Navy with a forward operating base and a place to plan, store equipment for naval operations and accommodate Royal Navy personnel.
Hammond said, "This will guarantee the presence of the Royal Navy in Bahrain well into the future. The expansion of Britain's footprint builds upon our 30 year track record of Gulf patrols.''
UK defence secretary Michael Fallon added, "This new base is a permanent expansion of the Royal Navy's footprint and will enable Britain to send more and larger ships to reinforce stability in the Gulf. We will now be based again in the Gulf for the long term.''
The new facility will support UK operations in Iraq, where RAF jets have been attacking targets as part of a US-led coalition against Islamic State (IS) militants.
The base would also be used for operations against piracy and for aerial surveillance.
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