Mr Costello, who is one of the nation's leading campaigners on social justice issues, will take up his new role in January 2004.
His appointment follows the resignation in June of Dr Lynn Arnold as Chief Executive of World Vision Australia to take up a new role with World Vision as Vice President for the Asia Pacific Region.
World Vision Chairman Peter King said Mr Costello had the experience, expertise and character to successfully lead Australia's largest humanitarian aid and development organisation into the future.
"Last year World Vision improved the lives of more than 11 million people around the globe," he said.
"This vital work can only be done in partnership and with the generosity of everyday Australians. I believe Tim Costello is well equipped to enable World Vision to expand on this vital work and to communicate to people the issues that are confronting the world's poor."
Mr Costello said he was excited at the challenges and opportunities that the new role at World Vision would present.
"I have spent my life ministering and speaking out on behalf of the poor and the downtrodden and I was drawn to World Vision's philosophy of helping the poorest of the poor, especially children," he said.
"No doubt there will be many challenges to be faced but I am confident with the talented and dedicated staff at World Vision and the support of everyday Australians we can achieve a great deal towards solving international poverty.''
World Vision is Australia's largest aid and development organisation. Last year it raised more than $213 million. Almost 70 per cent of that money was raised through the contributions of individual Australians.
Almost 300,000 children are sponsored by Australians through World Vision and at least 100,000 more people give regularly to emergency appeals.
Tim Costello studied Law and Education at Monash University and achieved his Masters in Theology at the Melbourne College of Divinity.
He was ordained as a Baptist Minister in 1986 and worked as the senior pastor of the St Kilda Baptist Church between 1984 and 1994. He was elected Mayor of St Kilda in 1993.
He has worked as the executive director of Urban Seed, a position he has held since 1985.
Mr Costello is also currently a spokesperson for the Interchurch Gambling Taskforce, a member of the National Advisory Body on Gambling and a member of the Alcohol Education and Rehabilitation Foundation.
He is a former national president of the Baptist Union.
Rev Costello has also written several books including : Streets of Hope: Finding God in St Kilda; Tips from a Travelling Soul Searcher and Wanna Bet? Winners and Losers in Gambling's Luck Myth, which was co-written by Royce Millar.