Ballerina Bussell, 48, said she is “truly humbled” to receive the honour for her services to dance, following a career that has spanned more than 20 years.
She said: “I am truly humbled to receive this honour.
“Dance is such a beautiful art form, it is inspiring and provides joy, social cohesion and wellbeing.”
She is being awarded the upgraded honour more than 10 years after she was given a CBE in the Queen’s Birthday Honours and over 20 years after her first accolade of an OBE in 1995.
Recently she has switched her pointe shoes for ballroom heels while she appears as a judge on popular BBC One series Strictly Come Dancing.
She studied at The Royal Ballet School from the age of 13 and went on to become the then youngest-ever principal at the Royal Ballet in 1989 aged just 20.
At the time of her appointment she had been performing as the principal dancer in a production of The Prince of the Pagodas, after being chosen for the role by choreographer Sir Kenneth MacMillan.
She went on to dance on stages across the world and has taken roles including the Sugar Plum Fairy in The Nutcracker, Giselle in Giselle and Swan Lake’s Odette.
In 2006 she announced she was retiring as the company principal from the Royal Ballet and in June 2007 she performed her last dance.
Notable performances include the Queen Mother’s 90th birthday tribute in 1990 and then in 2012 during the Olympic closing ceremony she led a large group of ballet dancers in a routine.
She joined the Strictly panel permanently in 2012, after having made several guest appearances on the show.