The practice triumphed over a raft of big names, including de Rijke Marsh Morgan, Ash Sakula Architects, Penoyre & Prasad, van Heyningen & Haward Architects and Gollifer Langston, to win the RIBA-organised competition.
The new building for Birmingham City Council will replace an existing facility on the site and has already been hailed as a 'model' community library.
Practice founder Richard Cottrell was delighted by the announcement. He said: 'This is an exciting opportunity to make a new type of library with the people of Birchfield.'
RIBA architect adviser Maggie Mullan, one of the competition judges, added: '[The firm] are an innovative and inspirational practice with a proven track record in producing significant architectural solutions within tight budgets and through inclusive and collaborative processes.
'Birmingham City Council has worked tremendously hard to get to this stage and I have no doubt that Cottrell and Vermeulen will help them realise the full potential of this pioneering project.'