After unsuccessful talks lasting more than two years and being restricted to home crowds of 57,000, the Hammers opted to take the matter to the High Court and announced on Monday they have reached an agreement with landlord E20.
The club say the new arrangement means that, subject to regulatory permissions, they will be able to sell up to 60,000 tickets for their games as soon as possible and leaves scope to expand up to 66,000 seats for future matches.
West Ham say the resolution of the row, which centred on the cost of making the additional seats available and the revenue from them, will result in more funding for E20 and significant additional matchday revenue for the club.
The club already boast the highest number of season-ticket holders in London and say and the new agreement gives them the chance to reward thousands of fans who have waited patiently on a waiting list.
In a joint statement, Lyn Garner, chief executive of E20, and West Ham vice-chairman Karren Brady said: "West Ham United and E20 will now work together to maximise this magnificent stadium for the benefit of fans, our community and the public purse.
"Both parties are fully committed to making the London Stadium the jewel in London's crown that we all know it can be."
West Ham moved into the old Olympic stadium in Stratford in 2016, having signed a 99-year lease, paying rent of £2.5million a year.
The new arrangement will see the London Stadium become the largest in the capital and the second biggest in the Premier League behind Old Trafford.
The club say the increase in capacity will also make the stadium a more attractive proposition for a potential naming rights partner.