Over 300 jobs at the eight DVA offices across the region are set to go, Westminster Roads Minister Stephen Hammond has confirmed.
Northern Ireland politicians have campaigned to save the jobs since the announcement of the consultation exercise was announced in December 2011 and a 30,000 signature-strong petition was delivered to Downing Street in protest over the proposal.
It has been claimed the move will improve services and save millions.
In total 309 equivalent full-time jobs are affected with 240 based in Coleraine and 69 across other offices in Armagh, Ballymena, Belfast, Downpatrick, Enniskillen, Londonderry and Omagh.
The offices are expected to close at the end of the year and it's hoped that all the staff can be redeployed across other parts of the civil service.
Environment Minister Mark H Durkan said he was "outraged" at Thursday's announcement and said it would have a knock-on affect on 500 jobs with around £22m taken out of the local economy.
He said: "This is devastating news for all the hard working staff of the DVA and their families.
"Motorists in Northern Ireland are accustomed to getting a very high standard of service from the DVA and no doubt this will be significantly affected when the service is delivered remotely from Swansea.
"The dedicated staff in DVA will also feel completely betrayed by this decision.
"They have consistently demonstrated their efficiency, hard work and commitment, producing customer satisfaction levels of over 97%.
"During the public consultation on these centralisation proposals, the motor trade and the motoring public demonstrated their overwhelming support for retaining local delivery of vehicle licensing and confirmed their high regard for the work of DVA.
"This announcement completely ignores all of these facts."
I appreciate that this will be a very worrying time for staff and their families, who will be feeling very let down by London right now, but I will work hard to bring some certainty to the situation for these dedicated and committed people as quickly as possible.
Mark H Durkan
He continued: "This is purely a narrowly focused cost-cutting exercise made with no regard whatsoever for standards of service, the impact on customers, or the wider impact on the economy of Northern Ireland and, in particular, of Coleraine.
"I have consistently made it clear to ministers in London that there is no justification for the centralisation of these services and jobs in Swansea.
"This decision represents the loss of funding for over 300 jobs, 235 of which are in Coleraine and an assessment by independent economists estimates that the knock-on impact will equate to the loss of around 500 jobs and will remove £22million from the economy.
"The Executive, political parties, trade union and DVA staff all campaigned to prevent this ill-judged decision being made but now that the decision has been made, my focus must now be on ensuring that the impact is lessened, as far as possible, for customers and for staff.
"DVA will continue to deliver services to customers to the highest possible standards right up until DVLA close the local service down but I am sure that the public will appreciate that, as that point approaches, it will be increasingly difficult to sustain the current high standards of service.
"I will be focusing heavily on the needs of the staff affected in DVA."
I would like to thank the staff in DVA for their continued support, and their hard work in delivering vehicle registration and licensing services to Northern Ireland motorists over the years.
Westminister Roads Minister Stephen Hammond said the move will improve services, saving £12m a year and allow Northern Ireland motorists to carry out services like taxing vehicles online.
He added: "Motorists in Northern Ireland have not been able to access many of the vehicle registration and licensing services that are taken for granted in the rest of the UK.
"These changes will address this and will mean that for the first time, Northern Ireland motorists will have greater choice and flexibility or where, when and how they use these services.
"We have listened very carefully to the points raised during consultation, particularly about the uncertainty for the staff affected.
"While the changes mean DVA will no longer provide these services, the Department of the Environment in Northern Ireland has said that they will try to avoid redundancies and minimise the amount of compulsory redundancies as a result of these changes.
"DVA staff will continue to provide support to customers until the end of the year while the new services are fully bedded in."
Reacting to the announcement, Coleraine Mayor, councillor James Harding said: "This is the worst possible outcome for the staff in the DVA.
"This decision will come as a devastating blow to the economy in Coleraine and the surrounding area," the UUP representative said.
East Londonderry MLA John Dallat added: "There are no depths the British Government will not stoop to when they want to offload bad news involving Northern Ireland.
"This calls into question the sincerity of the Tories when they claim they are on the side of rebuilding our economy and pointing to a better future for everyone," said the SDLP representative.
Sinn Féin Assembly Assembly man Cathal Ó hOisín added: "This is a massive financial blow not only to the workers but the entire community.
"It is now important that the needs of the workers are paramount in ensuring that they have their full redundancy entitlements and access to benefit advice as they face an uncertain future," the East Londonderry MLA added.
The MP for the area, Gregory Campbell, said the news was "deeply disappointing".
The DUP member said: "It is appalling that those who have done so much in being heavily involved in the campaign to retain the jobs are treated like this, everything possible that could be done was done.
"It is important that we give every support to assist the people who have received this devastating news," said the East Londonderry representative.