Extra charges for customers who pay for goods or services with credit or debit cards are to be outlawed from next year.
It will bring an end to levies of up to 20% on consumers paying for products such as flights or takeaways just because they use a card.
The new rules also cover charges levied by local councils and Government agencies such as the DVLA.
The Treasury estimates the total value of such surcharges at £473m a year.
But there was a warning that some retailers could raise prices to compensate for missing out on the charges.
Stephen Barclay, Economic Secretary to the Treasury, told Sky News that consumers feel “very cross” when, for example, booking a flight that costs £24.99 only to be hit with an additional £5 charge at the end of the process.
He batted off concerns that the new rules could add to the expense facing small retailers, saying they are already “used to” absorbing other costs such as business rates.
The changes, due to take effect from January, are being applied as the result of an EU directive.
The Treasury said the directive banned such charges being levied by Visa and Mastercard but that it had gone further, extending it to cover other card and payment providers such as Amex, PayPal and Apple Pay.
Businesses usually say they add on the charges to cover the cost of processing card payments.
The Government said that while many industries had acted to absorb these costs and not passed them on to consumers, the new rules would bring an end to the practice entirely.
It said it had previously capped the costs that businesses – including small shops as well as larger businesses – face for processing card payments, and would engage with retailers “to assess if there is any more that can be done to help”.
Mr Barclay said: “Rip-off charges have no place in a modern Britain and that’s why card charging in Britain is about to come to an end.
“This is about fairness and transparency, and so from next year there will be no more nasty surprises for people at the check-out just for using a card.
“These small changes can really add up and this change will mean shoppers across the country have that bit of extra cash to spend on the things that matter to them.”
Consumer group Which?, which has been campaigning for years to end card surcharges, welcomed the announcement.
Which? money expert Gareth Shaw said: “These new rules will finally put an end to this unfair practice.”
Guy Anker, managing director of MoneySavingExpert.com, said it was good news for consumers but added: “We expect some companies will raise prices for all to compensate for the loss.”