Experts are excited by the find because other than the effects of sea life, such as barnacles, coral and marine life, it is largely intact.
Amazingly the main undercarriage tyres remain inflated but the propellers clearly show the damage inflicted during the bomber's fateful final landing, experts have said.
Lifting it from the sea will use pioneering technology and but will be tricky because of tide and weather conditions.
Once it has been lifted, work will start to conserve and prepare the Dornier for display. The work will take place at the Michael Beetham Conservation centre, the RAF Museum's conservation centre at Cosford, Shropshire.
It will be placed in two hydration tunnels and soaked in citric acid for the first stage of its conservation. Once the delicate process is complete, the aircraft will be displayed at the museum's London site within the context of the Battle of Britain story.
Sonar scans by the RAF Museum, Wessex Archaeology and the Port of London Authority then confirmed the identity of the aircraft as the Dornier Do 17Z Werke number 1160.
Nicknamed the Luftwaffe's "flying pencil" bombers because of their narrow fuselage.
A platform is now above the wreck and divers have started to build a cage around the aircraft - working in 45-minute shifts - at the start of the salvage operation which should take around three weeks.
Hundreds flocked to The Wings Museum in Sussex to meet 14 veterans of Bomber Command. It may end up being one of the last events of its kind in the South as the former flyers and air crew are all in their 90s now.
Our reporter Derek Johnson speaks to Wing Commander John Bell and Air Commodore John Langston as well as Daniel Hunt from the Wings Museum and Aidan Mars, whose grandfather was a navigator on Lancaster bombers.
Veterans of the convoys that supplied Allied forces in the Arctic had their first glimpse today of the campaign medal they've waited 70 years to see. The Royal Mint has finally begun production of the Arctic Star. Fred and Sangeeta introduce our coverage.
World War II war heroes who served on the Arctic Convoys and in Bomber Command will begin receiving brand new awards in recognition of their heroism and bravery within weeks, the Defence Minister Mark Francois has announced.
Production of the new Arctic Star and Bomber Command clasp will kick start this week. Up to a quarter of a million veterans and the families of those who have sadly died could be eligible to receive the new awards in recognition of their unique contribution protecting Britain during World War II.
Living veterans and widows will be the first in line to receive the awards from as early as March.
Mark Francois, Minister for Defence Personnel and Veterans, said: “All those who served our country in Bomber Command and on the Arctic Convoys deserve nothing but the utmost respect and admiration.
"That’s why I am delighted that these special individuals will in the next few weeks begin to receive the Bomber Command clasp and Arctic Star that they have so long deserved.
“I am also pleased to announce that the families of those no longer alive will also be able to apply for these awards in recognition of their loved one’s bravery.”
The Prime Minister announced the new awards last December and after extensive consultation the final designs have now been agreed.
The Arctic Star will be based on the World War II Stars and the Bomber Command clasp, to be worn on the ribbon of the 1939 to 1945 Star, will follow the design of the Battle of Britain clasp.
Veterans of the Second World War Arctic Convoys will begin receiving medals recognising their heroism and bravery "within weeks", the Government will announce today.
Defence Minister Mark Francois will announce that production of the new Arctic Star and a clasp for veterans of the RAF's Bomber Command will start this week.
The move follows David Cameron's announcement in December that he was accepting the recommendations of a review of military decorations by the former diplomat Sir John Holmes.
A long-running campaign to honour the achievements of the seamen who kept open the vital supply routes to the Soviet Union in what Winston Churchill called "the worst journey in the world" had previously been rejected on grounds of protocol.
Sir John also concluded that Bomber Command veterans had been treated "inconsistently" with their counterparts in Fighter Command.
Up to 250,000 veterans and the families of those who have died could be eligible to receive the new awards from as early as next month.
Priority for the new awards will be given to applications from veterans and widows. Other next of kin will also able to apply and will receive their awards shortly afterwards.
The government's plans to award veterans of the Arctic convoys campaign medals comes after years of campaigning. Servicemen past and present as well as local politicians had been locked in a battle to get those who served on the convoys recognition for their bravery during the second world war.
Living veterans and widows will be the first in line to receive the new medals. Production of the accolades is due to get underway soon.
Gosport MP Caroline Dinenage has welcomed the news that the Arctic Convoy Veterans of WW2 will begin receiving medals in recognition of their heroism and bravery.
“I'm delighted that having finally made the decision to award the medal, the Government have turned the design and criteria around in rapid time.
"The Arctic Convoy veterans are all heroes in the truest sense of the word. After ten years of campaigning my delight to see justice finally being done is tinged with sadness that so many are no longer alive to receive the medals they richly deserved.”