The Falkland Islands will hold a referendum on its "political status" in a bid to end the dispute with Argentina over the archipelago's sovereignty.
The islands' government made the announcement ahead of the anniversary marking 30 years since the end of Argentina's 74-day occupation in 1982.
It said it wanted to send a firm message to Argentina that islanders want to remain British.
The UK prime minister said Britain would support the result of the vote.
The referendum will be organised by the Falkland Islands government and will take place in the first half of next year.
'Economic blockade'
The announcement comes amid growing tensions between the UK and Argentina surrounding the anniversary commemorations marking the islands' liberation by British forces on 14 June, 1982.
Foreign Office Minister Jeremy Browne is currently there on an official trip.
Argentina claims sovereignty over the islands it calls the Malvinas, and wants the UK to negotiate over their rule.
Recently, UK ministers have accused Argentina of trying to impose an "economic blockade" on the islands.
The South American country has been turning away cruise ships carrying the British flag and is taking legal action against five British oil firms exploring the coast of the islands.
Gavin Short, chairman of the islands' legislative assembly, said they were holding the referendum "to show the world just how certain we are about it [our future]".
"I have no doubt that the people of the Falklands wish for the islands to remain a self-governing overseas territory of the United Kingdom.
"We certainly have no desire to be ruled by the government in Buenos Aires, a fact that is immediately obvious to anyone who has visited the islands and heard our views.
"But we are aware that not everybody is able to come to these beautiful islands and to see this reality for themselves.
"And the Argentine government deploys misleading rhetoric that wrongly implies that we have no strong views or even that we are being held hostage by the UK military. This is simply absurd."
'Resolute support'
Prime Minister David Cameron said it was "absolutely right" that the islanders set out how they intended to "make their voices heard once more".
"And Britain will be resolute in supporting their choice," he said.
"Next year's referendum will determine beyond doubt the views of the people of the Falklands. Britain will respect and defend their choice.
"We look to all UN members to live up to their responsibilities under the UN charter and accept the islanders' decision about how they want to live."
Foreign Secretary William Hague said: "I hope very much that Argentina, and indeed the whole of the international community, joins the UK in listening carefully to what they have to say."
The prime minister's official spokesman later confirmed the UK government had been aware of the plans and had been in discussions with the Falklands government before the announcement, but said "it was their decision and we fully support it".
Argentinian president, Cristina Fernandez de Kirchner, is due to attend a meeting of the UN's decolonisation committee on Thursday.
The Falkland Islands, a rocky archipelago in the South Atlantic, are 7,780 miles from the UK and 1,140 miles from Buenos Aires.
With the exception of the 1982 occupation by Argentina - which sparked the Falklands War - they have been under British control since 1833.
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