Thousands of large companies will be forced to share details of the difference between what they pay their male and female workers.
The Government has agreed to implement the Liberal Democrat measure despite years of Tory opposition to it.
The move will mean companies employing more than 250 people will be required to publish the gap between average pay for their male and female workers.
More than 10 million people across the UK are currently working at firms covered by the legislation.
The current approach, which is voluntary, has seen only five out of around 7,000 large companies publish their gender pay gap.
The new measure, which will come into force within 12 months, could result in fines of up to £5,000 for firms that do not reveal the details.
Equalities Minister Jo Swinson said she was "delighted" her party won the "argument in Government".
She said the move "will force companies to ask themselves difficult questions about how they are valuing the contribution of women in their workforce and act to address problems".
Deputy Prime Minister Nick Clegg said: "These measures will shine a light on a company's policy so that women can rightly challenge their employer where they are not being properly valued and rewarded."
The legislation will be debated in the Lords on Wednesday, with the Government tabling an amendment to the Small Business Bill.
A Government spokesman said: "Under this Government the gender pay gap is the lowest ever and has virtually been eliminated for those working full time under 40.
"However the pay gap persists, so we think it's time to move forward, so we can create the conditions to ensure that there is equality in workplaces across the country."
Shadow equalities minister Gloria De Piero said: "This is fantastic news for women but why have they waited so long?
"The reality is that it's only when the Government realised they would be defeated on this issue by Labour in the House of Lords that they saw the need to act."
The move comes as the head of the UN agency promoting equality for women said not a single country has reached gender parity.
UN Women executive director Phumzile Mlambo-Ngcuka made the comments 20 years after a groundbreaking conference in Beijing where 189 nations adopted a blueprint to achieve equality for women.
Ms Mlambo-Ngcuka said that although progress had been made since Beijing, there are still fewer than 20 female heads of state and government.
She said the number of female politicians increased from 11% to just 22% in the past 20 years.
Ms Mlambo-Ngcuka also said "the sheer scale of the use of rape that we've seen post-Beijing", especially in conflict situations, "tells us that the women's bodies are viewed not as something to respect, but as something that men have the right to control and to abuse."
