The decision was taken at a meeting of BJP MLAs. Thakur's name was proposed by Suresh Bharadwaj and Mahender Singh and seconded by other members.
While former chief minister Prem Kumar Dhumal had last night opted out of the race, Thakur, a MLA from Seraj in Mandi district, and Union minister J P Nadda were the frontrunners for the chief minister's office.
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A lack of consensus among the newly elected MLAs had resulted in the two central observers -- Union ministers Nirmala Sitharaman and Narendra Singh Tomar -- returning to Delhi from Shimla yesterday to hold fresh consultation with the central leadership.
A two-member team of central observers, which was in the state on December 21 and 22, had taken feedback from members of the state BJP's core committee, MPs and some MLAs.
The BJP ousted the Congress from power by winning 44 out of the 68 seats.