He joined the FT in 1991, and was subsequently political editor and banking editor and ran the paper's investigations unit.
He was financial editor of the FT until September 2000, overseeing the paper's business coverage and its Companies and Markets section. He was also on the FT's editorial board as an assistant editor.
Prior to his career at the FT, Peston was City editor of the Independent on Sunday.
He was offered, but turned down, the job of Sunday Telegraph City editor six years ago.
Peston's move ends weeks of speculation and will also serve to clarify the City editor's position at The Sunday Times.
It has been vacant since Kirstie Hamilton left the post last month to join another City PR agency, Tulchan Communications.
The News International title is thought to be keen to replace Hamilton, who wrote on media, banking and City institutions, with another senior journalist.
There may be journalists in the frame for Bennett's job who will now concentrate on the other high-profile national newspaper business desk position which up for grabs.
'Once the Sunday Telegraph appointment is made, names will come up for The Sunday Times,' one source told PRWeek.
Bennett is to be chief executive of Gavin Anderson UK and a member of the agency's European management board.
He had been City editor of The Sunday Telegraph since 1995, running the Business and Money sections.
Peston is currently editorial director of Quest, an online service for investment institutions. The service is owned by investor Collins Stewart.