London trio Arsenal, Chelsea and Tottenham have also linked up with six European clubs - three from Spain (Atletico Madrid, Barcelona and Real Madrid) and three from Italy (AC Milan, Inter Milan and Juventus) - to create a rival competition to the Champions League.
It is anticipated three more clubs will join the breakaway group as founding members with the new competition, which will begin "as soon as practicable" to eventually feature 20 teams.
A joint statement read: "Twelve of Europe's leading football clubs have today come together to announce they have agreed to establish a new midweek competition, the Super League, governed by its founding clubs.
"AC Milan, Arsenal, Atletico Madrid, Chelsea, Barcelona, Inter Milan, Juventus, Liverpool, Manchester City, Manchester United, Real Madrid and Tottenham Hotspur have all joined as founding clubs.
"It is anticipated that a further three clubs will join ahead of the inaugural season, which is intended to commence as soon as practicable."
The timing of the announcement is incendiary coming ahead of an anticipated announcement from UEFA confirming changes to the Champions League format on Monday.
The European governing body is expected to approve an increase from 32 to 36 teams from 2024 with the existing structure of eight groups of four replaced by one league. The format, known as the 'Swiss model', would see all teams play 10 games in the first stage with opponents determined by a seeding system.
The statement from the 12 clubs makes clear they do not believe these proposed changes go far enough.
It added: "The formation of the Super League comes at a time when the global pandemic has accelerated the instability in the existing European football economic model.
"Further, for a number of years, the founding clubs have had the objective of improving the quality and intensity of existing European competitions throughout each season, and of creating a format for top clubs and players to compete on a regular basis.
"The pandemic has shown that a strategic vision and a sustainable commercial approach are required to enhance value and support for the benefit of the entire European football pyramid.
"In recent months extensive dialogue has taken place with football stakeholders regarding the future format of European competitions.
"The founding clubs believe the solutions proposed following these talks do not solve fundamental issues, including the need to provide higher-quality matches and additional financial resources for the overall football pyramid."
It is proposed the new competition will be played in midweek with the eventual 15 founding members being joined by five qualifiers. It will be played initially in two groups of 10 with an eight-team knockout stage.
The organisers claim it will generate more money than the Champions League and that will result in a greater distribution of revenue throughout the game.
The statement added: "The new annual tournament will provide significantly greater economic growth and support for European football via a long-term commitment to uncapped solidarity payments which will grow in line with league revenues.
"These solidarity payments will be substantially higher than those generated by the current European competition and are expected to be in excess of E10billion during the course of the initial commitment period of the clubs."
News of the breakaway competition leaked out before it was officially announced and had already provoked a fierce backlash from UEFA and various national leagues and associations.
They pointed out the competition was unsanctioned and clubs and players risked bans by being involved.
Gary Neville claimed clubs should be relegated, Jamie Carragher called Liverpool an "embarrassment" and Prime Minister Boris Johnson demanded answers as plans for a new European Super League came to light.
The backlash has been both fierce and prompt, with Liverpool great Carragher taking aim at his former club on Twitter after they confirmed their plans.
"What an embarrassment we've become @LFC," he said. "Think of all the people who have come before us at this club who would be equally embarrassed as well. #SuperLeague."
Ex-City player Micah Richards said the idea was "an absolute disgrace" earlier in the day and former United captain Roy Keane said the move "comes down to money, greed".
Neville said he was appalled by the developments, which he feels are motivated by greed.
"I am a Manchester United fan and have been for 40 years but I am disgusted, absolutely disgusted," the former England and United defender told Sky Sports.
The news has led to responses from politicians as well as those within football, including Prime Minister Johnson.
"Plans for a European Super League would be very damaging for football and we support football authorities in taking action," he wrote on Twitter before Sunday evening's confirmation.
"They would strike at the heart of the domestic game, and will concern fans across the country.
"The clubs involved must answer to their fans and the wider footballing community before taking any further steps."
Culture Secretary Oliver Dowden also commented on the matter, saying any decisions should involve fans.
"Football supporters are the heartbeat of our national sport and any major decisions made should have their backing," he said in a statement.
"With many fans, we are concerned that this plan could create a closed shop at the very top of our national game. Sustainability, integrity and fair competition are absolutely paramount and anything that undermines this is deeply troubling and damaging for football.
"We have a football pyramid where funds from the globally successful Premier League flow down the leagues and into local communities. I would be bitterly disappointed to see any action that destroys that."
Damian Collins MP, the former chair of the Digital, Culture, Media and Sport select committee said: "The idea of creating a closed franchise league of elite football clubs must be stopped.
"This is a self-serving proposal by a small number of clubs seeking to maximise their revenues from the global audience of football, and to the detriment of everyone else."
Andy Burnham, the Mayor of Greater Manchester, tweeted: "That phrase 'the game's gone' always used to annoy me. But with VAR and now this, nothing else better sums up where we are. It's the phrase of the day. #TheGamesGone"