United thought they had secured Jones' services last week, only for the transfer to be halted due to an unforeseen snag.
It was claimed Blackburn were holding out for more cash and that Liverpool had jumped in with a £22million offer. Arsenal and Chelsea were also monitoring the situation.
However, Jones, who featured for England Under 21s in their opening European Championship match against Spain in Denmark on Sunday night, apparently told Rovers he did not wish to join any other club than United.
And with the Red Devils refusing to budge beyond the figure - believed to be £16.5million - that triggered a buyout clause in the 19-year-old's contract, Blackburn have been forced to agree a sale.
'Manchester United is delighted to announce it has signed an agreement with Blackburn Rovers for the transfer of Phil Jones,' said a United statement.
'The player passed a medical in Manchester last week and has agreed a five-year contract.
Solid: Jones holds off Arsenal captain Cesc Fabregas earlier in the season
'The deal will be completed once the player returns from international duty.'
It takes to four the number of United players who started the Under 21 game, emphasising the importance Sir Alex Ferguson is placing on youth as he rebuilds his squad in the wake of last month's Champions League final defeat to Barcelona.
In addition, the Old Trafford chief is hoping to complete the signing of Spain goalkeeper David de Gea, who produced an excellent performance in Herning on the opposite side to Jones.
However, it is also anticipated Ferguson will land Aston Villa's Ashley Young once the Midlands outfit have sorted out their managerial vacancy, and a replacement is anticipated for Paul Scholes, who confirmed his retirement last month.
Source: Daily Mail