It is thought that the agency pitched against Farm, Quiet Storm and the incumbent, Red Bee Media, for the business. But Quiet Storm denies it was involved in the process.
Karmarama, which has previously done work for the broadcaster on a project basis, pulled out of the pitch last week. The review was handled by the AAR.
Albion will be responsible for producing integrated campaigns for the broadcaster's portfolio of channels, which include UKTV Gold, UKTV Style and UKTV Food.
It is thought that Albion's initial focus will be on marketing new commissions such as UKTV Gold's Jim'll Fix It Strikes Again and UKTV Style's The Clothes Show.
The decision will not affect the media account, which is remaining with PHD. Red Bee Media retains the on-air marketing activity for UKTV, which is part-owned by BBC Worldwide.
Kerry Yates, UKTV's head of brand, said: "Albion showed an insightful understanding of our business challenges, both from a planning and creative perspective. It presented some great ideas that captured the spirit and talent of our programmes."
Separately, Karmarama has been signed to handle UKTV Gold's on-air rebranding task. The agency will create a new on-air identity.