Human remains kept in nine national museums can now be moved from British collections under new powers included in the Human Tissue Act.
Museums must consider each request for repatriation of remains
Remains which are reasonably believed to be under 1,000 years old can be moved - opening the way for indigenous groups to reclaim their dead.
The law affects the British Museum, famed for its Egyptian collection, and the Natural History Museum.
The move comes after Australia lobbied for the return of aboriginal remains.
Most of the UK's 2,000 museums are already able to respond to claims, but the nine national museums were governed by laws which barred them from removing items from their collections.
Science v culture
"This announcement is the right response to the claims of indigenous peoples, particularly in Australia, for the return of ancestral remains," said culture minister David Lammy.
Australian prime minister John Howard and his British counterpart Tony Blair made a joint declaration in 2000 to improve repatriation.
"I hope that this will lead to renewed and mutually beneficial relations between our major institutions and claimant groups," Mr Lammy added.
In guidance published by the department, he said he hoped there would be a balance between respecting the wishes of indigenous communities and the need for scientific research when considering requests for returning remains.
According to the guidance, human remains includes bodies, whole or part skeletons, individual bones or fragments of bone and teeth, soft tissue including organs and skin, embryos and slide preparations of human tissue.
Hair and nails
However, it does not include hair and nails, although it is acknowledged that some communities give these a sacred importance.
But if any human matter has been modified in some way by human skill or bound with other non-human materials to form an artefact then it is included under the term "human remains", the guidance said.
The way in which the remains ended up in the museums is now considered "unacceptable", the department said.
"For example, some were acquired between 100 and 200 years ago from indigenous peoples in colonial circumstances, where there was a very uneven divide of power."
The department published Guidance for the Care of Human Remains in Museums for institutions in England, Wales and Northern Ireland.
It also plans to set up an advisory service to help smaller institutions with decisions about human remains.
The other national museums are the Armouries, the Imperial War Museum, the Museum of London, the National Maritime Museum, the National Museums and Galleries on Merseyside, the Science Museum, and the Victoria and Albert Museum.