The fan-led review into the men's game made recommendations that the government will establish an independent regulator for.
English football clubs who break financial and other rules will be punished by the regulator.
Legislation will give fans more say in the running of the game and a new owners test will be introduced.
The review made 10 recommendations to the government on how to improve football governance.
The review was chaired by a former sports minister, who was responsible for a number of high-profile crises in the sport, such as the failed European Super League.
The endorsement of the review by the government is an enormous step forward, but also worrying because of the unclear time frame for making the changes.
The government said a white paper on the changes will be published in the summer, but there is no timetable for implementing them.
The new regulator will be supported by laws that allow it to hand out punishments and have financial oversight of clubs, meaning it can investigate and gather information.
The new owners and directors test will replace the current tests carried out by the Football League and the Premier League.
Roman Abramovich has been selling his company since the government imposed sanctions on him and a Saudi Arabian-backed takeover of the club was announced in October. The ownerships were criticized by a group.
The new test will be implemented on an ongoing basis.
It will include a newintegrity test for owners and executives and stronger investigations before a purchase.
The government has accepted or supported all of the strategic recommendations of the review, including committing to legislation for a statutory independent regulator which will regulate financial resilience as well as ownership of clubs, according to a statement from the minister.
This is an enormous step forward in providing much-needed reform for football.
The vested and conflicted interests in the game have resisted the much-needed reform for so long, so they are nervous that this commitment will be delayed or watered down.
She said that further delays could be catastrophic for clubs, communities and fans.
Helen MacNamara, chief policy and corporate affairs officer at the league, told the DCMS committee that the league does not want a statutory independent regulator.
The white paper will set out plans for fans in the day-to-day running of clubs and make sure fans have a bigger say on changes to their club kit.
The white paper will try to improve equality and diversity.
More support from the Premier League to the pyramid through a solidarity transfer levy, paid by clubs in the top flight, was recommended by the review.
The government believed that this should be solved by the football authorities.
There has been no progress on discussions between the football authorities on the redistribution of finances and I share the view of government that this needs to be addressed as a matter of urgent importance.
Fair Game supported the government&s announcement but said there was a need for a firm timetable for change.
Fair Game said that it was disappointing that there was no mention of a new international transfer tax at first glance.
Nadine Dorries said that football is nothing without its fans and for too long the football authorities have collectively been unable to tackle some of the biggest issues in the game.
The government took decisive action to conduct the fan-led review and today we have endorsed every one of its ten strategic recommendations.
Dan Roan is an editor.
This will be seen as a major defeat for the country's top clubs, and a significant moment in the sport's history, after the Premier League told MPs that it was opposed to a statutory independent football regulator.
Despite the turmoil sparked by the attempted European Super League, controversy over the Saudi takeover of Newcastle United, and financial meltdown at Derby County, the Premier League still hoped to persuade ministers to let the FA act as regulators.
The government may have had no choice but to back the key recommendation of the fan-led review because of the chaos at Chelsea, which was perhaps seen as one footballing crisis too many. Many who have been calling for radical reform will be pleased by that and the commitment to greater supporter engagement.
It's not yet clear if the new owners and directors test will prevent any of the club takeovers or financial issues that have plagued the game in recent years, and when exactly it will be brought into law and fully established.
Not everything was called for. She recommended that the premier league clubs pay a solidarity transfer levy to support the football pyramid and redistribute wealth. The government has left this to the football authorities.
It will be a relief to the league and a disappointment to the Football League, who may feel that this is a missed opportunity to balance out the financial landscape.
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