Manuel Pellegrini has announced his long-awaited appointment as Manchester City manager with the lofty target of leading "the best squad in the Premier League" to domestic and Champions League titles next season.

The 59-year-old also promised a "new cycle and a new style" from the Roberto Mancini era as he was finally confirmed as the Italian's successor on Friday, almost two weeks after leaving Málaga. His arrival on a three-year, £3.4m a year contract had been delayed by a pay-off dispute with the Spanish club, whose appointment of Bernd Schuster as their new coach on Friday enabled the Chilean to rubber-stamp his move to the Etihad Stadium.

Pellegrini agreed personal terms with City last month and the club have since underlined their determination to reclaim the Premier League title from Manchester United by spending £30m to sign the Brazilian midfielder Fernandinho from Shakhtar Donetsk plus an initial £14.9m to prise Jesús Navas from Sevilla. Isco, who flourished under Pellegrini at Málaga and shares the same agent as his fomer manager, is expected to follow after his involvement in the European Under-21s Championship with Spain.

The additions to a squad that finished 11 points behind United in the Premier League last season and bottom of their Champions League group will, City's new manager believes, deliver a genuine challenge on both fronts in his debut campaign in charge. "Everyone knows that when you arrive at a club like Manchester City you must win titles," said Pellegrini.

"Manchester City have invested a lot of money to improve the squad every year and to try and win titles every year. They were not successful in some titles [last season] but I'm sure next year we can win maybe the Premier League and Champions League. We will try to win it all."

Pellegrini is currently on holiday and will officially commence work as City manager on 24 June. He will bring three members of his back-room team from Málaga to Manchester – long-time assistant Rubén Cousillas, the goalkeeping coach Xabier Mancisidor and fitness coach José Cabello – and has confirmed that Mancini's former assistant, Brian Kidd, will remain on the coaching staff.

The former Villarreal and Real Madrid coach said of Kidd: "It is very important for me that he stays at the club. I need him. He knows all about the club and the Premier League so it is very important he has agreed to stay with me. I'm really happy about that.

"It was not easy for him to finish the season after Mancini finished. He has a lot of experience in English football."

Pellegrini has spent his 26-year managerial career in Spain, Chile, Ecuador, Argentina, where he won league titles with San Lorenzo and River Plate, but insists he will have no problems adapting to the Premier League. Speaking in perfect English to City's website, he said: "I'm 100% sure I won't have any problems being in the Premier League. I've worked in four different countries and now England. I know a lot about the Premier League and I won't have any problems in that sense. I will adapt."

City's new manager will be expected to improve dressing room relations at the club and the connection to the youth academy. It was notable how often Pellegrini was asked about Brian Marwood, the academy managing director who endured a difficult relationship with Mancini, during the interview for the official website. He admitted: "It is one of my duties at Manchester City to work closely with the youth team as well as the first team squad."

The club's chairman Khaldoon Al Mubarak described Pellegrini as "a hugely experienced and successful manager with a proven track record. We have been greatly impressed throughout the selection process by his philosophy, his attitude and his commitment to the long-term development of Manchester City."

And Pellegrini added: "Roberto did a great job in Manchester but I think now we start a new cycle, a new style of football, adding to what Roberto has done. I had other important offers from other important clubs but the most important thing for me after speaking with Khaldoon, Txiki [Begiristain, director of football] and Ferran [Soriano, chief executive] is that I am sure we can make a great management team to reach the targets that Manchester City wants from the next few years. Also, I am sure, we have the best squad in the Premier League. We have wonderful players that can win important titles over the next three or four years."