Ms Waters came second, with 21.3% of the 12,915 votes cast.
His position as head of the anti-EU party may raise eyebrows among his former colleagues in Brussels, where he worked for the European Union as lead strategist on common defence policy.
Mass resignations, including 18 of the party's 20 MEPs, had been threatened if the far-right candidate, who has described Islam as evil, had won.
"Even last week, the clear divisions within the party could be seen here in Kent, as Mr Bolton and Chris Wells, the leader of Ukip's only council in the country in Thanet, publicly clashed over the future of Manston airport and the general running of the council".
"We can't lead the nation and we can't hold the government to account and we can't achieve our core goal at all", he said.
New Ukip leader Henry Bolton has Nigel Farage's endorsement and members will be relieved Anne Marie Waters wasn't elected, according to a political commentator.
JK: Top Hizbul Mujahideen terrorist gunned down by security forces
Abdul Qayoom Najar alias Janshab, Abid, Wazeer and Qayoom chacha was the son of Abdul Ahad Najar of Batpora Sopore. Police said that Najar was involved in several killings of security forces personnel and civilians.
Revealing two options for a new logo for conference delegates to vote on Friday morning, party members opted for a design featuring a lion over a series of simplified shapes five to one, interim leader Steve Crowther announced.
In comments which appeared to be aimed at Ms Waters, the former Army officer warned earlier this month that Ukip was in danger of becoming the "UK Nazi Party" if it picked the wrong leader to succeed Mr Nuttall.
He said: "I do not see myself now as simply being your leader, I see myself as serving this party".
Mr Farage said he was "delighted" Mr Bolton had won the leadership battle. Here's everything you need to know.
"There is no greater calling than that and I would call on all of you, whether you voted for me or not, to rally around the party, to be united".
Ms Waters, whose candidacy is backed by former English Defence League leader Tommy Robinson, has generated backing on social media and has encouraged her supporters to join the party to vote for her.
- London ban will not affect Uber service in Welwyn Hatfield
- Accountancy giant Deloitte hit by cyber attack
- Palestine becomes Interpol member state
- Hurricane Maria: Mandatory Evacuations Ordered in Parts of N. Carolina
- Trump fuming over Price's charter flights
- Voting systems in 21 states were targeted by hackers, government agency says
- PLISKOVA, MUGURUZA the latest to fall
- Killer Clown Arrested in 27-year-old Florida cold case
- Pilot union BALPA urges Ryanair to improve working conditions
- Spain sending extra police to Catalonia over independence referendum