"I'm very honoured and humbled... not only when I think of some of the great poets who have occupied the post since the 17th century, but when I think of some of the wonderful poets writing now.
The poet laureate is appointed by the monarch on the advice of the government -- and was a job for life for most of its history, until former premier Tony Blair agreed a 10-year term with outgoing holder Andrew Motion.
Speaking alongside culture minister Andrew Burnham, she announced she would be donating the 5,750-pound-a-year (8,600-dollar, 6,500-euros) stipend which goes with the job to the Poetry Society.
But she joked about the other perk of the job: a "butt of sack" -- old English for a supply of wine, which nowadays equates to about 600 bottles of sherry.
"Andrew (Motion) hasn't had his yet, so I've asked for mine up front," she quipped.
Prime Minister Gordon Brown congratulated Duffy, calling her "a truly brilliant modern poet who has stretched our imaginations by putting the whole range of human experiences into lines that capture the emotions perfectly."
The literary honour was first conferred on John Dryden in 1668, followed over the centuries by Wordsworth, Tennyson, John Masefield and more recently John Betjeman and Ted Hughes.
Duffy, who has also written children's picture books, reportedly hesitated before accepting the job -- she has voiced reservations in the past.
After being passed over for it in 1999, she said: "I will not write a poem for Edward and Sophie ...No self-respecting poet should have to" -- a reference to the wedding that year of Prince Edward and Sophie Rhys-Jones.
Her gritty, often witty verse has also included wry observations about royalty, government ministers and her poetic forebears, such as in "Translating the English, 1989" which included the lines:
"Welcome to my country! We have here Edwina Currie/and The Sun newspaper. Much excitement/Also the weather has been most improving/even in February. Daffodils. (Wordsworth. Up North.) If/you like ...
As well as: "A tour of our wonderful/capital city is not to be missed. The Fergie,/The Princess Di and the football hooligan, truly you will/like it here, Squire."
Duffy said the fact that she was a lesbian no longer mattered.
"I think we've all grown up a lot over the past 10 years," she said.
"Sexuality is something that is celebrated now we have civil partnerships and it's fantastic that I'm an openly gay writer, and anyone here or watching the interviews who feels shy or uncomfortable about their sexuality should celebrate and be confident and be happy.
"It's a lovely, ordinary, normal thing."
Duffy's immediate predecessor made little secret of how difficult he found the job: having to produce poems to order for public events, whether or not the inspiration took him.
"Part of me is very relieved to give it up," Motion told the BBC before standing down, noting some of his low points over the last decade.
"I tried to write something for Prince William's 21st birthday in the style of a rap, because I thought 'he's a young person and I'll do it in a kind of humorous way' and I wish I hadn't done it really," he said.
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