The home is so old that when it was built Britain was still part of Continental Europe.
The circular structure near Scarborough, North Yorkshire, which dates back to the Stone Age 8,500 years BC, was found next to a former lake.
The house predates the dwelling previously thought to be Britain’s oldest, at Howick, Northumberland, by at least 500 years.
The team said they are also excavating a large wooden platform made of timbers which have been split and hewn. It is thought to be the earliest evidence of carpentry in Europe.
Dr Chantal Conneller and Barry Taylor from the University of Manchester have been working with Dr Nicky Milner from the University of York at Star Carr since 2004.
The house was first excavated by the team two years ago.
According to the archaeologists, the site was inhabited by hunter-gatherers from just after the last Ice Age, for between 200 and 500 years.
They migrated from an area now under the North Sea, hunting animals including deer, wild boar, elk and enormous wild cattle known as auroch.
Although they did not cultivate the land, the inhabitants did burn part of the landscape to encourage animals to eat shoots and they also kept domesticated dogs.
Dr Milner said: “This is a sensational discovery and tells us so much about the people who lived at this time. From this excavation, we gain a vivid picture of how these people lived. For example, it looks like the house may have been rebuilt at various stages. It is also likely there was more than one house and lots of people lived here.
“The platform is made of hewn and split timbers; the earliest evidence of this type of carpentry in Europe. And the artefacts of antler, particularly the antler headdresses, are intriguing as they suggest ritual activities.”
Dr Conneller said: “This changes our ideas of the lives of the first settlers to move back into Britain after the end of the last Ice Age. We used to think they moved around a lot and left little evidence. Now we know they built large structures and were very attached to particular places in the landscape.”
Mr Taylor added: “The ancient lake is a hugely important archaeological landscape many miles across. To an inexperienced eye, the area looks unremarkable – just a series of little rises in the landscape.
“But using special techniques I have been able to reconstruct the landscape as it was then. The peaty nature of the landscape has enabled the preservation of many treasures including the paddle of a boat, the tips of arrows and red deer skull tops which were worn as masks.
“But the peat is drying out, so it’s a race against time to continue the work before the archaeological finds decay.”
David Willetts, the universities and science minister, said: “This exciting discovery marries world-class research with the lives of our ancestors.
“It brings out the similarities and differences between modern life and the ancient past in a fascinating way, and will change our perceptions for ever. I congratulate the research team and look forward to their future discoveries.”
The research has been made possible by a grant from the Natural Environment Research Council, excavation funding from the British Academy, and from English Heritage, which is about to schedule the site as a National Monument.
The Vale of Pickering Research Trust has also provided support for the excavation works.
The world-renowned Star Carr site, which dates back to 9,000BC, was first discovered by local man John Moore in 1947 after he came across a flint blade in a field and began digging for artefacts.
He found a number of other significant sites in the area before excavation went ahead between 1949-1951 and 1985-1989. Dr Conneller, Dr Milner and Mr Taylor recommenced excavation in 2004