The decision extends the agency's six-year relationship with the airline on its paid and organic search account.
The agency will work with the airline's digital marketing team to drive BA's search engine optimisation and pay-per-click strategies.
Bigmouthmedia will also be responsible for developing and executing the company's paid search campaigns across the UK market.
The agency's existing contract was due to expire at the end of September 2008 and as part of the airline's standard procurement policy, a re-pitch was launched at the beginning of August 2008.
Chris Davies, British Airways' digital marketing manager, said: "Search optimisation activity is an excellent way of driving brand awareness and revenue.
"We have selected bigmouth due to their strategic approach and excellent pedigree and experience in the travel industry."
Lyndsay Menzies, the managing director of Bigmouthmedia, said: "We are delighted to have retained the BA search business through competitive tender.
"The process has been a great opportunity for bigmouthmedia to showcase our long term strategy for BA. We are obviously very excited about rolling this out over the next couple of years and continuing to have a strong relationship with the British Airways team."
The appointment comes hot on the heels of BA's move into social media with the launch yesterday of Metrotwin, an online community linking Londoners and New Yorkers. The website marks one of the biggest forays into social media by a major brand to date.