It was commissioned by the designer William Morris and designed by Philip Webb, both founders of the arts and crafts movement.
Morris lived in the house with his wife for five years from 1859 and decorated it in a medieval style with bright colours and strong patterns.
Linda Parry, President of the William Morris Society, said the acquisition of the Red House was of "major importance".
She added: "One of the most important and influential of all nineteenth century buildings in Britain is now available to all."
The house gets its name from its red bricks and the steep red-tiled roof. Its garden inspired much of Morris' early designs of wallpaper and fabric.
Described as "more a poem than a house" by the painter Dante Gabriel Rossetti, it is considered important in the development of the arts and crafts movement.
Keith Halstead, of the National Trust said: "William Morris and the founders of the National Trust shared a belief in the power of beauty to enhance the quality of our lives and this principle is as relevant today as it was 150 years ago."
The National Trust plans to open the house and garden to visitors from early summer 2003
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Shame it's now been engulfed by one of London's less alubrious suburbs.
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