The veteran diplomat, who served for 17 years in the Foreign Office, will take over from Sir Tim Barrow in the role based in 10 Downing Street.
The Prime Minister said his experience in helping to negotiate the Good Friday Agreement and working on "some of the world's most complex conflicts" meant he was "uniquely qualified" to advise the Government on global challenges.
Mr Powell was also involved in talks over the Chagos Islands sovereignty dispute, which earlier this year saw Britain hand the territory over to Mauritius.
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