Ellie Simmonds triumphed in her S6 400 metres freestyle shoot-out against Victoria Arlen and demolished the American's world record by more than five seconds in a duel that was under threat until a few hours before.
Simmonds' victory in five minutes 19.17 seconds destroyed the world record set in June by Arlen at the US trials.
However, it was only at 2pm that Arlen's participation in the race was confirmed by the International Paralympic Committee.
The American had been deemed ineligible and excluded from London 2012 before the United States' appeal to the IPC was upheld and the 17-year-old was reinstated on Thursday.
Arlen passed an initial assessment but she was also observed during racing today and it was only following this morning's heat that any doubt surrounding her involvement in her three S6 freestyle events was dispelled with a review in a year's time.
The pair were head to head at the halfway point before Arlen inched ahead but at the final turn Simmonds had a lead of 0.08secs and, as she pulled away, the American had no answer, the Briton touching first, 1.01secs ahead, to send the crowd into a frenzy.
Simmonds said: "I'm just so pleased to touch and get a world record and a five second PB.
"I knew it was going to be so tough coming into it and with Victoria being on form, I knew I had to give it my all and give it everything.
"And that last 50 just killed me but I am so pleased to touch.
"It was one of the toughest races of my life so far."
It was the first time the pair had met, which left Simmonds in the unaccustomed position of knowing little about her rival's race approach.
However, it seems it is to be a long-term rivalry, if a friendly one, with the duo set to meet again in both the S6 50m and 100m freestyle.
When asked if she had been affected by the doubts surrounding her, Arlen said: "Oh not at all. I came here to swim and that's what I did today and that's what I intend to do for the rest of the Games.
"Team USA has been nothing but this incredible support system and I'm very honoured to be here representing my country."
She added: "It was incredible. I couldn't believe I was swimming there. Her and I were talking together in the ready room. We were like 'let's go do this'. We both were ready and excited. She's a sweetheart."
Sophie Pascoe had set five world records before tonight when she managed to break two more in the same race, the S10 100m butterfly in 1:04.43 with the opening length a 50m record of 29.57.
Olesya Vladykina lowered her own SB8 breaststroke record to 1:17.17 while Cecilia Camellini added the S11 50m freestyle mark to the 100m she set last night in 30.94.
Yang Bozun set a new mark of 25.27 in the S11 50m freestyle and Blake Cochrane dipped under his own SB7 100m breaststroke mark in 1:18.77.
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