The Swedish king has given his consent and "in accordance with the constitution received the approval of the government," a royal court press release stated on Tuesday.
"They have known each other a long time now and as Crown Princess Victoria and Daniel Westling have become engaged it is nice for them to also do so. Love is infectious," Nina Eldh, a press spokesperson at the Royal Court, told news agency TT.
The date for the wedding has not yet been decided, but according to Eldh it will not take place before Crown Princess Victoria's or next year's general election.
"The engagement was confirmed today. At a press conference at Solliden on Öland later today the young couple will meet the media and talk about the happy event," she said.
Sten Hedman, a society reporter who has followed the Royal Court for many years, argues that the engagement comes at a surprising time. He thinks that it is also surprising that the engagement will be so long.
"But I presume that they consider it to be over the top with two royal weddings and that it will perhaps divert attention from the election. I therefore presume that the wedding will take place later in the autumn."
Hedman gave his opinion of Madeleine's choice of husband.
"He is the perfect choice, future lawyer, faultless Swedish upper-middle class. No one can have any complaints. He and the king are also said to work well together," Hedman said.
The government will hold an extraordinary meeting on Tuesday morning to discuss the matter.
Princess Madeleine is 27-years-old and is the third child of King Carl XVI Gustaf. She is third in line to the Swedish throne after Crown Princess Victoria and Prince Carl Philip.
She graduated from Enskilda high school in 2001 and has since completed a bachelor degree in art, ethnology and modern history.
Madeleine is popular among the Swedish population and has worked hard in recent years to shed her party princess image, developing a keen engagement in social issues.
In addition to other public duties, she works with the World Childhood Foundation, a charity founded by her mother, Queen Silvia, in 1999.
Jonas Bergström, who is 30-years-old, met the princess through mutual friends in the autumn of 2002.
Bergström grew up in Djursholm outside of Stockholm. His father Claes runs two successful construction companies. Jonas also has two older brothers - Ted and Peder.
Jonas Bergström graduated from Danderyd's high school in 1999 with top grades and completed a law degree at Stockholm University in 2006. He is currently working as a lawyer at the prestigious Stockholm firm Vinge.