The 31-year-old catwalk queen hopes the Virgin deal will signal an end to speculation her career has been irreversibly tainted by pictures published in a British tabloid of her snorting cocaine.
Despite being unceremoniously dumped by a string of brands including H+M and Chanel in the wake of the scandal, a source for Branson's firm believes the incident has enhanced her appeal.
The insider says, "Kate is one of the most recognisable faces in the world, especially after her drug problem.
"We think she deserves a second chance. We are delighted to have her on board."