The former Pompey striker, 48, took over as caretaker boss at Fratton Park in November after Michael Appleton quit for Blackpool.
Whittingham has had to deal with huge problems at cash-strapped Portsmouth, only able to field youngsters, loan players and free agents on month-long contracts while the club were in administration.
Pompey have used more than 50 players this season, but having been able to field a settled side recently, Whittingham has guided them to a run of just two defeats in their last 10 matches.
Their fine form was not enough to avoid relegation from League One, which was inevitable due to the 10-point penalty imposed after they exited administration earlier this month.
But Portsmouth's new owners, the Pompey Supporters' Trust, believe Whittingham is the man to lead their promotion bid in 2013/14 and have handed him a one-year rolling contract.
New chairman Iain McInnes said: "We are delighted to have a character of Guy's calibre in charge.
"He understands the club and what we are trying to achieve and he has shown in the past few months what he can do when he has the opportunity to work with a settled group of players."
Whittingham said: "I'm very pleased, it's something I wanted to do since taking over as caretaker.
"It's been a rollercoaster ride but we always believed we could show people that we were capable of doing the job.
"We believed that, once we got a settled side, we could show people what we can do. I'm glad the decision has been made and now we can get on with the planning."
Meanwhile, Whittingham says he is hoping to persuade Andy Awford to stay on as assistant manager.
Whittingham wants his former Pompey team-mate, who had been working as youth boss, to stay in the role - but the ex-England Under-21 defender is undecided.
"It's an ongoing situation we are hoping to sort out quickly," said Whittingham.
"I'd like to take it out of his hands but people can't be forced into things. Everyone knows Andy loves the Academy and he has a big choice to make.
"We want him to be with us, but he's his own man and he makes his own decisions.
"We got to where we are because of the coaching staff and everybody deserves the chance to help carry the club forward."