Plummeting newspaper sales per issue reached a 27-year low this July at 358,345, while the Guardian Unlimited website was read by 11,220,372 in the same month.
"The challenge for us was to remain true to our journalism, now attracting a record worldwide audience online, while at the same time finding a modern print format for a new generation of readers in this country," said Mr Rusbridger in MediaGuardian.
"We believe we've found it with the Berliner format, which combines the portability of a tabloid with the sensibility of a broadsheet."
The first edition of the new format will be published on Monday, September 12.
The switch in size - between broadsheet and tabloid - is already used by several European titles including Le Monde and comes after the Independent and the Times launched successful tabloid editions back in 2003.
The G2 features section will be re-introduced in a smaller format while the daily specialist sections will be known as 'G3s', increased in size to match the paper itself and Thursday's Life and Online sections rebranded.
The Saturday Guardian will switch to the new size on September 17, adding an eight-page Family section, while its Sunday sister paper the Observer will undergo conversion early next year, according to MediaGuardian.
Speaking in the current edition of British Journalism Review, Telegraph Group executive vice chairman Jeremy Deedes speculated that the Telegraph, previously reticent about reducing in size, may follow suit.
"It is going to be very interesting to see what happens when the Berliner-size Guardian comes out," he said.
"Maybe that's the way forward for the Telegraph - maintaining the essence of a serious newspaper with a convenience in size for people who don't read their newspapers at the kitchen table."
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