Architects Tod Williams and Billie Tsien have won the long-running competition to design the Obama Presidential Library in Chicago.

Announced by the Barack Obama Foundation today, the New York-based firm will partner with local practice Interactive Design Architects (IDEA) to create a cultural venue in commemoration of the 44th US president's term of office.

"TWBTA stood out in their commitment to explore the best ways of creating an innovative centre for action that inspires communities and individuals to take on our biggest challenges," said the foundation.

The building, estimated to cost more than $500 million (£380 million) and expected to complete in 2021, will include a library containing Obama's presidential archives and a museum dedicated to his presidency. The project will be funded by private donations.

It will be located in Chicago's South Side, where first lady Michelle Obama was born and raised and where her husband was first elected to public office.

"This has been a transformative presidency and we will work to make a centre that embodies and expands the Obamas' vision," said Williams and Tsien. "We look forward to collaborating with our partners, Interactive Design Architects, and to working with the South Side community."

The husband-and-wife duo are best known for their 2001 American Folk Art Museum in New York, which was controversially demolished 13 years after it was built to make way for the expansion of neighbouring MoMA.

Other notable works by the firm, established in 1986, include the Logan Center for the Arts at the University of Chicago, the Barnes Foundation in Philadelphia, the LeFrak Center at Lakeside in Brooklyn and the Center for the Advancement of Public Action at Bennington College, Vermont.

"We have chosen to work on only a few projects at a time, to allow for intense personal involvement in all aspects of the design and construction of a building," said Williams and Tsien. "This work should reflect optimism and love. The spiritual aspect of the work will emerge if the work is done well."

The team was selected from a seven-strong shortlist that included David Adjaye, Renzo Piano and Snøhetta.

Rumours in 2015 tipped British architect Adjaye for the project, after Chicago was chosen over New York and Honolulu as the site of the library.

The selection process has been ongoing since 2014, when the Barack Obama Foundation was set up to oversee the creation of the facility.

Previous presidential libraries include Robert A M Stern's George W Bush Presidential Center in Dallas, Texas, and the Clinton Library in Little Rock by Polshek Partnership – now known as Ennead.