The former Dudley North MP said it was "a massive privilege" to be one of 36 new peers, and vowed to "stand up for the Black Country" when he takes his place in the Lords.
Mr Austin told the Express & Star: "It's a great honour. To think that a kid from Russells Hall School and Dudley School – and the son of a refugee who arrived in Britain unable to speak the language in 1939 – can end up in the House of Lords, it's amazing really.
"It's a massive privilege for me and my family. I wish my parents were here to see it.
"I want to thank people in Dudley who gave me the biggest privilege in the world by making me the MP for the place where I grew up.
"This would not have happened if it wasn't for the work we did in Dudley. I'm really grateful to everyone who supported me, in particular the brilliant team of staff who supported me over 15 years in Parliament."
Mr Austin was an MP from 2005-2019 and served as a minister in Gordon Brown's government.
He announced his decision to quit Labour early last year after accusing then leader Jeremy Corbyn of "poisoning" the party with extremism.
He then urged people to vote Tory in November's election in order to stop the "catastrophe" of Mr Corbyn getting into power.
He said he plans to take his seat in the Lords when peers return in September.
"I'll be working hard in the House of Lords to speak up on the issues I care about, and rest assured I'll be standing up for people in Dudley and the Black Country," he added.
He is among five former Labour MPs to be appointed to the Lords, alongside Frank Field, Kate Hoey, Gisela Stuart and John Woodcock.
Brexiteer ex-cricketer Ian Botham has also received a peerage, as have former Tory chancellors Philip Hammond and Ken Clarke, as well as ex-Scottish Conservative leader Ruth Davidson.
The list confirms that in a break with precedent, former House of Commons speaker John Bercow was not given a peerage.