The government included the proposals in amendments tabled recently to an energy bill being debated and due to pass into law by December this year.
The plan would support households and communities which install solar panels or small wind turbines on their property.
They would earn a feed-in tariff, which guarantees a price premium for supplying electricity from renewable sources into the national grid.
"We hope to have it available by 2010," said a spokeswoman for the Department of Energy and Climate Change.
Britain's present price support, or renewables obligation (RO), is considered complicated and bureaucratic for small producers, and will be replaced by a feed-in tariff for microgeneration of renewable electricity up to 3 megawatts (MW) Â— enough to power about 1,500 homes.
The 3 MW cut-off would make feed-in tariffs available for schools, hospitals and communities as well as households.
"We don't want to tinker with the RO," the spokeswoman added. Some 95 percent of RO claimants now were above the 3 MW threshold.
The RO forces utilities to get a certain portion of their electricity from renewable sources or else pay a penalty, money which is then used to pay renewable power producers.
Feed-in tariffs have been very effective in boosting the adoption of solar power by households, farmers and communities in Germany. Such tariffs, also very popular in Spain, guarantee a certain power price premium typically for 20-25 years.
The government had not yet decided on the value or duration of a British tariff, the spokeswoman added.
Under EU targets Britain will have to get 15 percent of its energy from renewable sources by 2020 compared to just 1.3 percent in 2005.
The amendments also included provisions to support the production of renewable heat, for example from wood or methane from waste dumps.