Knox, 25, and her ex-boyfriend Raffaele Sollecito, 29, spent four years in jail, but were freed on appeal in 2011 largely on the grounds DNA evidence was flawed.
On hearing the news today Knox admitted it was 'painful' to receive the decision, but said she was 'confident in the truth.'
Knox returned to the U.S. after she was freed in 2011 and she now lives in Seattle - a retrial is likely to take place in absentia, as the U.S. is unlikely to extradite her.
Retrial: Amanda Knox holds hands with her boyfriend James Terrano in downtown Seattle on Sunday. Today she spoken of her anguish after Italy's highest criminal court overturned her acquittal for the murder of British student Meredith Kercher
Grim: The body of Miss Kercher, right, from Coulsdon, Surrey, was found in November 2007 in her bedroom at the house she shared with Knox, left, and other roommates in Perugia,
After six hours of deliberations yesterday, this morning the Court of Cassation in Rome ruled that an appeals court in Florence must re-hear the case against the American as well as her Italian ex-boyfriend Raffaele Sollecito.
Prosecutors argued that despite the appellate decision, they still believe Knox and her former boyfriend, Raffaele Sollecito, are responsible for the death.
Decison: Raffaele Sollecito, pictured in 2009, also faces a retrial
'We are still convinced that they are the co-authors of Meredith's homicide,' Perugia prosecutor Giovanni Galati said, according to the Italian news agency ANSA.
In a statement, Miss Knox said: 'It was painful to receive the news that the Italian Supreme Court decided to send my case back for revision when the prosecution's theory of my involvement in Meredith's murder has been repeatedly revealed to be completely unfounded and unfair."
She added: 'No matter what happens, my family and I will face this continuing legal battle as we always have, confident in the truth and with our heads held high in the face of wrongful accusations and unreasonable adversity.'
The body of Miss Kercher, from Coulsdon, Surrey, was found in November 2007 in her bedroom at the house she shared with Knox and other roommates in Perugia, an Italian university town where the two women were exchange students.
Her throat had been slashed.
Prosecutors alleged that the Leeds University student was the victim of a drug-fuelled sex game gone awry.
Knox and Sollecito denied wrongdoing, but were convicted of Miss Kercher's murder in December 2009 and sentenced to 26 and 25 years respectively after a trial that grabbed headlines all over the world.
They were cleared in October 2011 after a fresh hearing uncovered a bungled police investigation.
Stephanie Kercher, Meredith's sister, said there were still 'unanswered questions' over her sister's death
FIVE YEARS OF SCRUTINY: TIMELINE OF EVENTS
1 October 2007: Kercher is killed at her apartment in Perugia. Her throat has been slashed. Police find her a day later. Tests show evidence of sexual activity before death
6 November 2007: Knox is arrested, along with Sollecito and Congolese national Patrick Diya Lumumba. They are held on suspicion of conspiracy to commit manslaughter and sexual violence.
20 November 2007: Rudy Guede detained in Germany and extradited to Italy. Mr Lumumba released without charge
28 October 2008: Guede sentenced to 16 years in prison. A judge rules Sollecito and Knox will face a murder trial
4 December 2009: Knox and Sollecito found guilty of murder and sexual violence, and jailed for 26 and 25 years
3 October 2011: Knox and Sollecito acquitted
26 March 2013: Re-run of appeals ordered. Acquittals overturned
Defence lawyers and experts revealed how evidence had been contaminated or poorly handled by forensic teams and that the conviction should be considered unsafe.
The appeals court noted that the murder weapon was never found, said that DNA tests were faulty and added that Knox and Sollecito had no motive to kill Kercher.
But yesterday prosecutors appealed against that ruling and argued that the acquittals were 'contradictory and illogical.'
An Ivory Coast man, Rudy Guede, was convicted of the murder in a separate hearing and is serving a 16-year sentence.
Today Meredith Kercher's said the family had 'lots of unanswered questions' after Italy's highest court ruled she should be retried.
Speaking at her family's home in Coulsdon, Surrey, Stephanie Kercher, 29, said she had just heard the news on TV.
She said: 'I've got no reaction in particular at the moment. I'm trying to find out what it means.
'I need to talk to our lawyer in Italy to get more information. We don't know the exact reasoning behind this decision. There are lots of unanswered questions.
'You're welcome to ask me later once I've spoken to our lawyer.'
Amanda Knox and Raffaele Sollecito were seen kissing in the wake of the murder
In today's ruling a panel of judges had to rule whether the Italian legal code was applied correctly and fairly in both trials.
If the case had been closed, they could have applied for compensation for unlawful imprisonment.
The hearing, held behind closed doors, only considered paperwork and legal documents with no new witnesses giving evidence.
Knox and Sollecito have both maintained their innocence, though they said that smoking marijuana the night Miss Kercher was killed had clouded their recollections.
Their behaviour in the days following the death, including being pictured kissing, raised suspicion.
Knox is due to be interviewed by ABC next month over her upcoming memoir
Prosecutors have alleged that Kercher was the victim of a drug-fuelled sexual assault.
A young drifter from Ivory Coast, Rudy Guede, was convicted of the slaying in separate proceedings and is serving a 16-year sentence. Ms Kercher's family have resisted theories that Guede acted alone.
The lawyer for the Kercher family, Francesco Maresca, was at the court today, as was Sollecito's father.
The court is also hearing Knox's appeal against a slander conviction for having accused Patrick Lumumba, a local pub owner, of carrying out the killing. He was held for two weeks based on her allegations.
Knox has written a book about her imprisonment and is due to give an interview to Diane Sawyer for American TV station ABC next month ahead of its release.
Publisher HarperCollins paid a $4million advance for the memoirs
Sollecito has also written a book and has already given an interview on Italian TV about the case.
He told interviewers that he and Knox were no longer a couple but they were still in touch.
He visited her in the United States at the end of last year and they speak on Skype regularly.
Sollecito resumed his studies in Verona and his father Francesco told reporters: 'He is calm and serene even if we are all in a state of apprehension.'
During the investigation and trial, prosecutors said Knox was highly sexual and had manipulated Sollecito but her lawyers dismissed the theory.
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