Ms Hall, a London Assembly member and former council leader, defeated Moz Hossain KC, a criminal barrister and political novice, in the ballot of about 20,000 London Tory members.
The result was announced at the Battle of Britain Bunker in Uxbridge by Tory party chairman Greg Hands in front of MPs and supporters. He described Ms Hall as “the next mayor of London”.
If she defeats Mr Khan next May, Ms Hall would become the first woman to be mayor of London.
She won by securing 57 per cent of the votes cast to 43 per cent for Mr Hossain. The precise number of votes cast was not disclosed.
She vowed to “do whatever it takes to win” and received a huge round of applause when she vowed to stop the Ulez expansion “on day one” if she becomes mayor.
She said: “Over the next 10 months I will expose Sadiq Khan for who he really is, and show London who we [Tories] really are. It isn’t about fame or glory for me or for us. I’m not interested in the perks of the job – I am focused on the job itself. I want to sort things, not pass the buck.”
She admitted: “We all know the scale of the challenge we face over the next 10 months.”
But, in a reference to the Evening Standard’s criticism of the Tory mayoral process and the calibre of the candidates, she said: “Some newspaper editors think we have given up. But let me tell you this: I will never give up on London.”
Mr Hands said Ms Hall and Mr Hossain had been “phenomenal candidates”.
“Both Moz and Susan would bring a breath of fresh air to London and get City Hall back to focusing on the issues that matter to us.”
The announcement was made in a venue which has a replica Spitfire and a Hurricane aircraft hanging from the ceiling. It was chosen by party officials to represent the “underdog winning” and indicate their belief that the Tories can deliver a shock victory next May.
Ms Hall had been regarded as the most likely winner after a third candidate, Dan Korski, withdrew from the race after being accused by TV producer and novelist Daisy Goodwin of groping her when he worked as a Downing Street aide a decade ago. He denies the allegation.
Ms Hall, a grandmother known for her plain speaking, faces a mighty challenge in seeking to defeat Mr Khan, who will seek an historic third mayoral term next May.
Nickie Aiken, the Tory MP for the Cities of London and Westminster and the party’s deputy chairman, said she believed party members had chosen Ms Hall because “she is a very well-established politician in London… and very effective at really holding Sadiq to account”.
Ms Aiken told the Standard: “She is a real political operator. She understands how the GLA (Greater London Authority) works. People know her. She has been out campaigning across the capital for decades. She’s well known, she’s well respected and she’s well trusted.
“She’s also brought up a family. She’s now got grandchildren. She knows the day to day struggles that families have. I really am excited about her campaign. I think it’s going to get stronger and stronger.
Mr Hands claimed Mr Khan was a mayor “more focused on sending out press releases rather than working to improve the lives of ordinary Londoners”. He claimed Mr Khan had “literally no achievements after seven years in office”.
But a spokesperson for London Labour said: “The Conservative candidate for Mayor is a hard-right politician who couldn’t be more out of touch with our city and its values.
“She’s an outspoken supporter of Trump, Boris Johnson and a hard Brexit. She cheered Liz Truss’s mini-budget, which sent mortgages and rents soaring. She doesn’t stand up for women. And she hates London’s diversity.
“Londoners deserve better than a candidate who represents the worst of the Tory failure and incompetence over the last 13 years.”
Last week Mr Khan said he wanted to face Ms Hall – but she claimed it was a “double bluff” designed to harm her chances, as he saw her as the bigger threat.
“I’m certainly never a lost cause,” she said at the weekend. She attracted sizeable support from grassroots Tories, prominent MPs such as Paul Scully and Bob Blackman, and cabinet minister Kemi Badenoch.
She describes herself as “slightly Right [wing]” on some issues and has attracted controversy for past comments on Twitter, such as when in 2014 she described reality TV star Gemma Collins as a “stupid, fat blonde woman”. She has also backed Donald Trump but recently said she wouldn’t like to see him re-elected US president.
During the month-long campaign, Ms Hall and Mr Hossain clashed angrily during a hustings debate. She claimed Mr Hossain “doesn’t understand how London works”, while he accused her of publishing “intolerant, hateful” messages on Twitter that he said would lose her support among voters.
Two weeks of voting closed at 11am on Tuesday. Mr Hossain claimed he had the “momentum” to secure victory. Ms Hall said she was “the experienced candidate [Mr Khan] fears”.
An opinion poll by Redfield & Wilton last month found Mr Khan had the support of 41 per cent of Londoners, compared with 33 per cent who said they would vote Conservative in the mayoral elections. It also found a net approval rating for the mayor of +27 per cent.
However, many Tories believe that next month’s proposed expansion of the Ulez to the Greater London boundary, and the likelihood of some Londoners believing it is “time for a change” at City Hall, will make it more difficult for Mr Khan to secure a third successive victory.
Mr Khan’s chances are also likely to be harmed by a switch in the voting system to first-past-the-post. This means that he will not benefit from the second preference votes of Londoners who vote Green or Lib-Dem, as has happened previously.
At the last City Hall elections in 2021, Mr Khan defeated the then Tory candidate Shaun Bailey by winning a total 1,206,034 votes – the second highest total in the history of the London mayoralty – giving him a majority of 228,433.
But he was only 120,670 votes ahead of Mr Bailey – who became Lord Bailey of Paddington yesterday when he was introduced to the House of Lords – after the first round of voting.
Mr Hossain was totally unknown politically until just over a month ago, when he was shortlisted alongside Ms Hall and Mr Korski.
At the time, the biggest surprise was the failure of Paul Scully, the Minister for London and a Tory MP, to make it on to the shortlist. He had been regarded as the candidate most likely to defeat Mr Khan.
Mr Scully later came out in support of Ms Hall, saying she had the “experience and focus” to become mayor.
“Stepping up to be mayor is a mammoth task, but Susan Hall has the smaller step to climb of the two,” he said.
Ms Hall, a Brexiteer whose slogan is “Safer with Susan”, has pledged to focus on crime if elected. Her first day in office would involve a meeting with Met commissioner Sir Mark Rowley on how to get the force out of special measures.
She has also pledged to scrap the Ulez expansion “on day one” – but retain the zone’s current boundaries – and to axe 20mph speed limits on main roads.
She ran a “do it yourself” campaign, aided by her daughter Louise Staite and volunteers known to her from City Hall, in which she sought to avoid controversy or making unfunded pledges.
Mr Hossain was backed by former Tory leader Sir Iain Duncan Smith, who he described as his “mentor” and was said to have won the support of many Asian Tory members, especially in east London.
He reportedly attracted wealthy backers such as property developer Nick Candy – who was spotted at the Battle of Britain Bukner when Mr Hossain’s defeat was confirmed – and telecoms billionaire Bassim Haidar.
But his campaign suffered a number of setbacks. He refused to sack three of his campaign team when they were seen on video at a “jingle and mingle” party when covid restrictions were in force.
And he endured a “car crash” interview on live TV when he was unable to say whether he supported or opposed the Government policy of deporting illegal immigrants to Rwanda or believed the UK should rejoin the EU.
The Tories last won City Hall in 2012, when Boris Johnson was re-elected for his second term as mayor.
Mr Khan holds the records for most votes (1,310,143) and biggest winning majority (315,529) from his inaugural victory in 2016 against Tory candidate Zac Goldsmith.