Virgin said that the contract, the first of its kind awarded outside of London under the Government's "super connected city initiative", would lead to the deployment of 'small cell' wireless networks in both cities.
Virgin trialled the use of the technology during the summer and said that this "win" for the company had proved that "small cell architectures can significantly boost the capacity of both 3G and 4G networks". Virgin said that the small cell technology allows for network capacity covering large areas and numbers of customers to be concentrated on small areas and groups.
Free Wi-Fi services could now be available to 1.2 million people by the start of 2013, it added.
"Through enabling the future deployment of small cells, Leeds and Bradford can look forward to their residents and visitors enjoying mobile connectivity as it was always meant to be, super-fast and reliable as standard, even in the busiest parts of their cities," Virgin said in a statement.
"The concession agreement with Virgin Media Business ensures that the cities of Bradford and Leeds can move towards super connectivity at no cost or financial risk to themselves, and allows both cities to share in the commercial success of future small cell deployments for the mobile network operators by Virgin Media Business," it said.
The leaders of the respective local councils in Leeds and Bradford said that the development would provide benefits to businesses in the area.
"I’m delighted our citizens, visitors and businesses will be among the first in the country to benefit from a free, fast, accessible city centre Wi-Fi service," Councillor Keith Wakefield, leader of Leeds City Council, said. "Leeds is leading the way in ensuring that our infrastructure is in place to make the most of future digital developments and we are pleased that our neighbours Bradford are also supporting the regional push for super-fast broadband."
Councillor David Green, leader of Bradford Council added: "The initiative will give existing local companies a greater competitive edge in national and global markets, as well [as] attracting new companies and bringing additional jobs."