The Government's Freedom Bill in November will abolish the right to clamp or tow vehicles parked on private land.
The ban will apply to private land only and will not change existing traffic enforcement by local authorities and police on highways.
Anyone who clamps or otherwise immobilises a vehicle or tows it away on private land without specific legal authority to do so will face criminal proceedings or civil sanctions.
Regional and local transport minister, Norman Baker, said: "The rules governing parking on private land should be proportionate and should not result in motorists being intimidated or forced to pay excessive fines.
"Cowboy clampers have had ample opportunity to mend their ways but the cases of bullying and extortion persist.
"That is why we are putting an end to these outrageous practices once and for all to ensure that drivers no longer have to fear intimidation from rogue traders, allowing the parking industry to begin to restore its reputation with the motoring public."
Currently, any individual undertaking wheel clamping must hold a frontline licence from the Security Industry Authority, with supervisors or directors holding a non-frontline licence.
This activity will cease once the ban is in place. There are currently 2,150 individuals who are licensed by the SIA to clamp.