The announcement followed the resignation of Laurent Lamothe from the post earlier this month in the face of repeated calls for him to quit over the failure to hold legislative elections for the past three years.
Lamothe's decision had threatened to plunge the poorest country in the Americas into political chaos once again.
Martelly named Paul as a replacement by presidential decree while awaiting ratification by both chambers of the legislature "in order to form a new government," his office said in a statement yesterday.
He was elected mayor of the capital Port-au-Prince and was seen as a close ally of then-president Jean-Bertrand Aristide.
His relations with Duvalier soured when Paul was tipped as a potential successor as head of state.
Arrested in 1988 under the military government of Prosper Avril, Paul was held in prison and tortured by the military along with other political activists.
The president is expected to pressure lawmakers to confirm his choice for prime minister.
"We have not yet been summoned by the president. He is due to speak about the future of the legislature after January 12 and before we can vote on a new government," a senator told AFP on condition of anonymity.
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