Patients, staff and visitors will be able to park free at almost every NHS hospital in Wales by the end of 2011.
Wales will be the first UK country to reform hospital car parking charges
The Welsh Assembly Government confirmed free parking will start from 1 April unless external contracts are in place.
Hospitals where parking is run by private companies will have to reduce costs until contracts expire.
The changes, the first in the UK, were welcomed by patient groups, but trusts say it will raise pressure and Lib Dems called it "ill-considered populism".
The reforms will mean by the end of the current assembly term in 2011, only four hospital sites out of a total of 130 should still have parking charges in place.
The Welsh NHS Confederation, which brings together all Welsh NHS organisations, said the reforms would "inevitably" add to the pressures placed on trusts.
'Tax on sick'
Nearly £5.4m was collected by NHS trusts in Wales from hospital parking charges in 2006/07.
It led to the British Medical Association (BMA) last week demanding car park charges be scrapped, claiming they were "a tax on the sick".
WHAT HAPPENS ELSEWHERE?
England - The government leaves it to local health chiefs to decide on policy, meaning charges are common with some hospitals levying up to £4 an hour
Scotland - Government has introduced a cap of £3 a day, although many hospitals charge less
Northern Ireland - Also left to local managers to decide, but a review of the policy is currently being carried out
The announcement fulfils the assembly government's commitment to reform charges for hospital parking, which was set out in the One Wales document outlining the agenda of the Labour and Plaid Cymru coalition.
Health Minister Edwina Hart said: "Car parking charges fall heavily on people frequently attending NHS hospitals, whether they are patients, staff or visitors.
"They are at best an inconvenience and at worst an unfair expense.
"Over time, all NHS patients, visitors and those who care for them will not have the expense or inconvenience of charges.
"By the end of the current assembly term, the vast majority of NHS sites will have free parking for all."
HAVE YOUR SAY
Parking should be free only for actual users of the hospital
Bob Price, Cardiff
Ms Hart said NHS trusts with external contracts will also have to reduce parking fees by funding schemes to reduce costs until deals expire or are ended.
Cath Lindley, general manager for Macmillan Cancer Support in Wales, said: "Cancer patients have long been calling for parking costs to be scrapped.
"On average, cancer patients make 60 trips to hospital from diagnosis to treatment to follow up, and as a result they are hit particularly hard, both financially and emotionally, by travelling costs and unfair parking charges.
PRIVATELY-RUN HOSPITAL PARKING
Princess of Wales, Bridgend 2006-2011
Glanrhyd, Bridgend 2006-2011
Neath Port Talbot 2002-2032
Univ Hospital of Wales, Cardiff 1996-2021
West Wales General, Carmarthen 2003-2018
Prince Phillip, Llanelli 2003-2018
Glan Clwyd, Bodelwyddan 2006-2011
Wrexham Maelor 2005-2008
Royal Glamorgan 2006-2011
Withybush, Pembs 2004-2009
Contracts for private contractors operating hospital parking. Source: Welsh Assembly Government
"These reforms would go some way towards reducing the financial burden that can come with a cancer diagnosis."
But Liberal Democrat AM Jenny Randerson claimed it could cause "chaos" and "risked a situation where the most vulnerable would not be able to access vital health services".
Ms Randerson said she supported the principle of free parking, but money would be "taken out of front-line care, as the government has not announced that it will be giving any extra".
It is expected that the additional costs to the NHS in Wales will be met from within annual NHS funding allocations.
Trusts will also be required to submit plans on how they will deal with additional costs, potential increases in demand, promotion of green transport modes and the potential use of spaces by commuters and shoppers.
Mike Ponton, director of the Welsh NHS Confederation, said: "It costs a lot of money to run car parks and the dilemma now is how to meet these costs without impacting on patient care.
"It will inevitably add to the pressures placed on trusts to provide services and balance the books.
"It will be even more important now to find new ways of controlling car parks to avoid misuse, particularly where hospitals are near town centres."
There are no plans to abolish the charges in England, although a Department of Health spokesman said "all government polices are always under review".