The show, which launched the careers of Will Young and Gareth Gates and will be a key element of ITV's 2003 primetime schedule, will be used as a vehicle to promote a range of Nestle Rowntree products.
BroadMind, the sponsorship division of MindShare, brokered the main on-air deal with 19 Entertainment, which is backed by Simon Fuller, the owner of the rights to Pop Idol.
Nick Hurrell, the M&C Saatchi joint chief executive, said: "This is more than a broadcast sponsorship, it is an unprecedented package of marketing activity covering on-air broadcasts and off-air communications through to packaging and merchandise."
The appointment sees M&C Saatchi consolidate its position on Nestle's roster. To date, it has handled advertising for All Stars.
Pop Idol, with its strong appeal across all regions, social groups and ages, is seen as having huge potential to boost sales of Nestle Rowntree confectionery. The first series attracted average audiences of 7.4 million and the total of 13.1 million people who saw the final show was more than those who watched England's World Cup match against Brazil.
Andrew Harrison, Nestle Rowntree's marketing director, who has previously been a trenchant critic of ITV companies for not selling their medium effectively enough, hailed the agreement as "the best sponsorship deal in television this year". He added: "It will showcase our products perfectly."
Kit Kat, Aero and Double Cream are among the Nestle range of confectionery products likely to be promoted via Pop Idol.
The deal is worth three times the amount that Vizzavi paid to sponsor the original series of Pop Idol.