Trump submitted Blanche's name to the US Senate, the White House said, days after committing to nominating him. He has been serving as acting attorney-general since April.
Blanche's nomination sets up a test of Trump's sway over Senate Republicans, who have shown an increasing willingness to resist parts of the president's agenda after months of largely acceding to his demands.
Blanche would need near-unanimous Republican support in the Senate, which Republicans control by a narrow 53-47 margin.
The nomination is a vote of confidence in Blanche after the Justice Department was forced to scrap a plan to create a nearly $US1.8 billion fund for victims of what Trump has called government "weaponisation."
The plan drew fierce backlash, much of it directed at Blanche, from Republican and Democratic politicians. Republican senators led the charge against the weaponisation fund, refusing to vote to fund Trump's immigration crackdown until Blanche committed to scrapping the planned fund.
Senator Thom Tillis of North Carolina, a key Republican on the Senate Judiciary Committee, has previously voiced scepticism about Blanche over the weaponisation fund and a criminal case against former FBI Director James Comey.
Following the nomination, Senator Chuck Grassley of Iowa, the Republican chair of the Senate Judiciary panel, lauded Blanche for his "commitment to transparency and support for law enforcement."
"Blanche is well-qualified and has shown his dedication to restoring law and order across our country," Grassley said.
The panel's top Democrat, Senator Dick Durbin of Illinois, blasted the selection.
"Donald Trump has been engaged in the most corrupt enterprise in the history of the Presidency," Durbin said in a statement. "Todd Blanche apparently has not noticed."
Blanche, 51, took over leadership of the Justice Department after Trump fired Pam Bondi in April amid tension over the agency's release of files related to convicted child sex offender Jeffrey Epstein and frustration the department was not moving forcefully enough against the White House's supposed political enemies.
Blanche, who served as Bondi's top deputy, previously defended Trump in three of the four criminal cases he faced in his years out of office.
To his critics, Blanche has continued acting like Trump's personal defender while overseeing a department that is supposed to pursue justice evenly.
Blanche signed off on a sweeping deal barring tax authorities from auditing years of past tax claims by Trump, his relatives and his businesses. He has also openly embraced an ongoing criminal probe into whether past investigations of Trump amounted to a conspiracy against him.
Blanche is a former federal prosecutor in New York who had little involvement in politics prior to his representation of Trump.
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