The decision to hand the tournament to France, which was voted through by the International Rugby Board (IRB) by 18 votes to three, is a significant blow to the Rugby Football Union (RFU) as it tries to boost interest in the sport.
The English bid, which included a promise to spend £5.5m on marketing the World Cup, was rejected because of its proposals to restructure the competition.
The IRB decided the World Cup should remain in its current format, and awarded the tournament to France, which has pledged a marketing spend of just £2.5m.
Firms including O2, Rover and Nike are among the brands that have commercial partnerships with the RFU. The IRB's decision comes on the back of England's Grand Slam success in the RBS Six Nations Championship.