The Austrian water treatment company had been replaced as title sponsor at Aston Martin this year, following a successful 2020 campaign with Racing Point that delivered one win with Sergio Perez at the Sakhir Grand Prix.
But with Aston Martin taking over the branding of Racing Point for this season and switching to British racing green colours, there was no scope for it to continue with the same deal it had last year.
BWT was left evaluating how best to continue its efforts in F1, and it is understood to have looked at other options, including both Williams and Haas. However, in the end it decided against a tie-up with either of those two teams.
On Wednesday, the company ended speculation about its F1 plans by announcing that it would be remaining as a partner of Aston Martin.
The team confirmed that while the colour of the new Aston Martin will be green, BWT's logos will be present on the car.
"While the look and feel of the new team to be launched on Wednesday 3rd March will be very different, featuring an all-new base colour, today's news ensures that subtle BWT brand accents as well as BWT brand logos will remain a feature of the all-new Aston Martin team livery," said the outfit.
BMW CEO Andreas Weißenbacher said: "I am proud to continue supporting this wonderful team of people and to start a new chapter with Aston Martin's return to Formula 1.
"Having seen the team enjoy such a strong 2020 season, we believe the years ahead are full of great promise and we want to continue supporting this team's journey towards the front of the grid."
BWT had originally hoped to get involved in F1 in 2017 as a sponsor at Mercedes, but was only interested in doing so if it could rebrand the whole car pink.
With Mercedes not willing to move away from its silver colours, a deal was instead struck between BWT and Force India for it to be principal sponsor for that season.
The company then stepped up to be Racing Point's title sponsor in 2020.