The BBC will continue not to allow product placement
Product placement is to be allowed on British TV shows, in a move due to be announced next week.
Independent broadcasters will be allowed to take payments for displaying commercial products during shows.
The change is intended to bring in extra funds for commercial broadcasters. Experts believe it could raise up to £100m a year.
There are currently strict rules against product placement and this ban would remain in place on BBC shows.
Culture Secretary Ben Bradshaw is expected to announce a three-month consultation on the changes in a speech to the Royal Television Society next week.
An ITV spokesman welcomed the move, which he described as "reforming UK prohibition".
He said: "If the government does decide to permit product placement, it will be warmly welcomed by the commercial broadcasting industry and advertisers alike.
"Reforming the UK prohibition would also be a welcome acknowledgement of the pressures currently faced by an industry in transition. New sources of revenue means better-funded content - which can only be good news for viewers."
The spokesman added that ITV had led the campaign for product placement in the UK, and said it could be an important new revenue stream, as it already is in Europe.
The culture secretary's predecessor, Andy Burnham, had said in March that "serious concerns" remained about product placement because it could harm editorial independence.
'Trust the consumer'
But the government now believes that placement should be allowed in some circumstances.
A spokesman for the Department of Culture, Media and Sport said the current situation puts the UK at a competitive disadvantage.
It is believed that ministers want to help struggling broadcasters such as ITV, which have been hit hard by the recession.
The change could mean that products will be much more visible in popular series such as Coronation Street and Britain's Got Talent. At present, the shows are forced to cover up labels to comply with the strict guidelines - or face fines.
It is hoped product placement will boost struggling broadcasters
On Channel 4's Big Brother, food and drink products consumed in the house come in packaging where any logos have been carefully obscured.
The ban would stay in place for the BBC and would continue to apply to all children's programmes across all networks.
The creator of Big Brother, Peter Bazalgette, said product placement was already widespread and that lifting the ban was "hugely overdue".
He said: "My prediction is that it could be worth £100m a year to commercial TV.
"Product placement needs to be done transparently, with credits that make it clear it has taken place.
"But you have to trust the consumer. If it's overdone or tasteless, viewers will switch off.
"And it's rife in British television anyway. There's product placement in movies that go on television and in imported American TV shows and dramas.
"And what about those sports events where sponsors' logos are worn on shirts? Product placement won't dramatically change the way we watch TV."
Steven Barnett, professor of communications at the University of Westminster, said the viewing public might have trouble distinguishing between what was "integral to the plot" and what had been paid for "as some kind or promotional device".
"I think we have to rely on the integrity of the programme makers which, when money is at stake, can sometimes be compromised," he said.
"I think there are situations in which a programme or an independent company might be a little bit more desperate for the cash where they might go to an advertiser and say, 'Look, we can build in a couple of minutes... with someone you'll want to be associated with, how much are you prepared to pay for that?'
"That's the point at which I think we need to be clear about the boundaries between genuine creative independence and advertiser pressure."