Mr Farage led the party before standing down to concentrate on an ill-fated effort to oust Commons Speaker John Bercow at the General Election.
Despite suffering serious injuries in a plane crash on polling day in May, Mr Farage will enter the race to replace Lord Pearson of Rannoch, who quit as Ukip leader last month saying he was "not much good" at party politics.
A party spokeswoman confirmed Mr Farage had announced his intention to stand for leader again at the party's conference in Torquay.
Mr Farage is Ukip's most high-profile figure and said last month that he would stand for the leadership if he felt he had recovered from his injuries.
Earlier yesterday Ukip's interim leader Jeffrey Titford predicted the party would eventually win a Westminster seat.