It said that Sherwood had been given a contract until the end of the 2014/15 season.
Club chairman Daniel Levy said: "We were extremely reluctant to make a change mid-season but felt we had to do so in the club's best interests.
"We are in the fortunate position of having within our club a talented coach in Tim Sherwood. We believe Tim has both the knowledge and the drive to take the squad forward."
Chris Ramsey, Les Ferdinand and Steffen Freund will be Sherwood's assistants for the first team.
The 44-year-old Sherwood, who played at clubs including Norwich, Blackburn and Spurs, won the Premier League with Blackburn in 1995 during a seven-year spell at Ewood Park.
He spent nearly four years at White Hart Lane, making more than 100 appearances and joined Spurs coaching staff in 2008 under Harry Redknapp.
He took over as interim manager after the sacking of Villas-Boas last week and guided Spurs to a 3-2 win at Southampton Sunday as interim boss.
--IANS (Posted on 24-12-2013)