Of the 506,438 votes, Mr Corbyn gained 313,209 with Mr Smith wining just 193,329.
It means Mr Corbyn has increased his mandate among the party’s membership having won 61.8 per cent of the vote.
Last year, Mr Corbyn won 59.5 per cent of the vote.
The Islington North MP said he was “honoured” to have been re-confirmed as leader as he delivered his victory speech at today’s result announcement in Liverpool.
Mr Corbyn hailed his “second mandate in a year to lead his party”.
But amid the bitter divisions that have marked the first 12 months of his leadership, Mr Corbyn added: “Remember in our party we have much more in common than that which divides us.”
Earlier this year, Mr Corbyn overwhelmingly lost a vote of no confidence among his MPs, with 80 per cent declaring they had no faith in his leadership.
Baroness Chakrabarti, a former civil liberties campaigner, told BBC’s Newsnight: “It’s going to be incredibly important that the Labour Party unites behind whoever wins. I hope and believe it will be Jeremy Corbyn.
“I do not approve of a decent 66-year-old man being mugged in broad daylight in cold blood by people who don’t see that it’s time for a change.”
The newly-appointed peer added she was “heartened” by suggestions Labour MPs could return to Mr Corbyn’s shadow cabinet over the next few weeks, following mass resignations from his top team in the wake of the EU referendum.
John Healey, who quit as shadow housing minister earlier this summer, urged Mr Corbyn to agree to a proposal for MPs to be allowed to elect the party’s shadow cabinet as a “powerful public declaration” the party is uniting.
Writing for the Huffington Post website, he added: “This is both the foundation for a fresh start for Labour and the basis for us to do our job for the millions of people who need Labour to succeed.”
Mr Corbyn is believed to be considering giving up his right to appointing his own top team and allow MPs to elect their own shadow ministers.
Shadow cabinet elections had been scrapped by previous Labour leader Ed Miliband in 2011.
Ahead of today’s result announcement Ladbrokes’ Jessica Bridge said: "It's no longer a case of if Corbyn wins, it's how much by, and the money firmly suggests he'll get at least 60 per cent of the vote share, if not closer towards 70 cent."
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