Orkney, along with 18th placed Shetland, are the only places in Scotland to make the list which is published today.
Wychavon in Worcestershire, the Derbyshire Dales and Hambleton in North Yorkshire were in third, fourth and fifth place, according to the research from Halifax.
The study looked at a range of factors to determine the places with the best quality of life, including life expectancy, health, employment rates, crime, education, broadband access, population densities and the weather.
Among the reasons why Winchester came out top, Halifax said, was that the employment rate was significantly higher than the national average, while gross weekly earnings of £824 were 27 per cent higher than the UK average at £646.
A high proportion (96.6 per cent) of residents reported being in good or fairly good health compared to a national average of 94.6 per cent.
Life expectancy rates in Winchester were also higher than the national average, with Winchester men expected to live to around 82-years-old, while Winchester women could expect to live until they were 85.
Crime rates in Winchester were also among the lowest in the country, while Office for National Statistics (ONS) figures indicated the Winchester adult population was among the happiest, most satisfied, most content and least anxious in the UK, Halifax said.
Orkney took second place due to low crime rates, low amounts of traffic on the roads and low population densities among other factors.
Hart in the south-east of England – a former winner in Halifax’s annual quality of life study over the past five years – fell to number 26 in the 2016 survey.
Halifax said one reason for this was the inclusion of two new categories in its research – the number of pubs and the availability of health clubs and leisure centres.
Martin Ellis, an economist at Halifax, said: “Looking across a wide range of indicators considered by our research, residents of Winchester in Hampshire enjoy the best quality of life in the UK, benefiting from a combination of above average weekly earnings, low crime rate and good health.
“On the other hand, there is a cost associated with a high quality of life with house prices in Winchester 9.7 times the average annual local income – significantly higher than the UK average of 7.2.”
Nearly two-thirds of the top 50 best places to live in the UK are in southern England, according to Halifax’s study.
Places outside southern England which appear on the list include Monmouthshire in Wales, Harrogate in Yorkshire and Rugby in the West Midlands.
Halifax’s research also found that the highest weekly average earnings were in Kensington and Chelsea in London at £1,273 per week. The lowest average annual rainfall, at 525mm, was in Castle Point in Essex.
The sunniest place in the UK was the Isle of Wight where residents enjoyed an average of 36.9 hours of sunshine a week, above the national average of 29.7 hours per week.
The biggest homes were found in Uttlesford in Essex and Chiltern.