Taylor became the first former head of state to be convicted by an international war crimes court since the second world war when he was found guilty last year of 11 counts of war crimes and crimes against humanity, including terrorism, murder, rape and using child soldiers.
His appeal was rejected last month by a UN-backed special court in The Hague.
Justice Minister Jeremy Wright said that following a request from the Special Court for Sierra Leone, Taylor will now be transferred to a prison in the UK.
Mr Wright said: "The conviction of Charles Taylor is a landmark moment for international justice. It clearly demonstrates that those who commit atrocities will be held to account and no matter their position they will not enjoy impunity."
Taylor, 65, aided rebels in Sierra Leone during a brutal civil war in the 1990s which left 50,000 people dead.
Thousands more were mutilated in the conflict, which became known for the extreme cruelty of rival rebel groups who hacked off the limbs of their victims.
Taylor helped to plan attacks in return for "blood diamonds" mined by slave labourers in Sierra Leone and political influence in the volatile West African region.
It is not the first time Britain has hosted foreign war criminals. Four men convicted of war crimes in the former Yugoslavia served time in British jails.