NEW YORK — The world’s largest optical telescope — to be called the European Extremely Large Telescope — will be built on a mountain in Chile, the observatory’s planners announced April 26.

The telescope’s newly chosen home is the Cerro Armazones mountain in the central part of Chile’s Atacama Desert. This location was picked for its optimal weather conditions — the skies are clear overhead about 320 nights a year, according to its European Southern Observatory (ESO) builders.

Chile’s Cerro Amazones beat out a bid by Spain to build the European Extremely Large Telescope (E-ELT) in that country’s La Palma region. The Chilean location won in the end because of its balance between consistent clear night skies and the ability to work in conjunction with other nearby observatories run by ESO, which is an astronomy collaboration by 14 European countries.

The new mega-observatory will have a primary mirror 42 meters wide and is reportedly expected to cost more than 1 billion Euros ($1.3 billion).

Other famous optical telescopes, such as the Keck Observatory in Hawaii with a mirror 10 meters wide and the 8.2-meter Subaru telescope, also in Hawaii, will be dwarfed by the E-ELT. The Hubble Space Telescope, with a mirror almost 2.4 meters wide, sounds tiny by comparison, but it can achieve higher resolutions than many larger Earth-based telescopes because it is outside of Earth’s distortion-causing atmosphere.

“This is an important milestone that allows us to finalize the baseline design of this very ambitious project, which will vastly advance astronomical knowledge,” said Tim de Zeeuw, ESO’s director general. “I thank the site selection team for the tremendous work they have done over the past few years.”

ESO already operates three observatories in Chile, including the Paranal Observatory and its so-called Very Large Telescope (VLT), which is also in the Atacama Desert a little more than 20 kilometers away from Cerro Armazones. Since they are so close, the new telescope will be operated in cooperation with Paranal.

“Adding the transformational scientific capabilities of the E-ELT to the already tremendously powerful integrated VLT observatory guarantees the long-term future of Paranal as the most advanced optical/infrared observatory in the world and further strengthens ESO’s position as the world-leading organization for ground-based astronomy,” de Zeeuw said.

Construction on the European Extremely Large Telescope is expected to receive a final go-ahead at the end of 2010, and the observatory could begin operations in 2018.