Wheel clampers will be banned from operating on private land to tackle rogue operators who exploit drivers by charging "exorbitant fees", Home Office minister Lynne Featherstone said today.
Ms Featherstone said previous efforts to curb the activities of unscrupulous clampers had failed and England and Wales would now follow Scotland which introduced a ban nearly two decades ago.
Motoring organisations hailed the "momentous" move, which will be introduced in the Government's Freedom Bill in November and could be in place by early next year.
"Even though we have tried to make this work by licensing individuals, companies who are responsible for the setting of the fees and the putting of signage have not really responded. We keep trying to make this work but it doesn't," Ms Featherstone told BBC Breakfast.
The equalities and criminal information minister said private firms would be banned from clamping or towing vehicles but would still be able to ticket parked cars.
Landowners could also install barriers to prevent parking, she added.
Ms Featherstone said despite a high number of complaints about clamping firms and the poor signage sometimes used to warn drivers, there had been "very, very few" prosecutions.
"Most police forces do not spend their time prosecuting clamping companies, that's the other side of this problem," she said.
Ms Featherstone said the Government had considered setting up an independent appeals tribunal but it would have cost £2 million plus future running costs.
"It still probably wouldn't address the heart of this problem, that it's an industry that just hasn't worked," she said.
She said some firms were operating a "sort of entrapment" and an outright ban was the right answer.
More than 2,000 existing clamping licences will be revoked under the plans for England and Wales, with towing away also outlawed, as ministers act to end the "scourge" of so-called cowboy clampers.
Only unlicensed vehicles are able to be clamped in Northern Ireland.
Once in force, anyone who clamps a vehicle or tows it away on private land will face big fines or even jail.
Only police or councils will be allowed to immobilise or remove a car in exceptional circumstances, such as a car blocking a road.
Private land clamping is said to be worth £1 billion a year, but has generated widespread complaints that some parking enforcement companies are extorting money from unsuspecting drivers.
In one case highlighted by campaigners yesterday, a nurse was clamped while visiting a patient and told to pay £350 for her car to be released.
For every hour she delayed payment, another £50 was added to the bill.
Another driver also revealed how he stayed in his car for 30 hours to escape £4,000 worth of penalty tickets from a clamping firm and his car being towed away.
Haroon Zafaryab, 27, told The Sun he had all four wheels clamped in Wembley, north London, before he managed to agree a £100 release fee.
The AA called clamping a "draconian punishment" which had "caused misery to motorists for often minor mistakes".
AA president Edmund King said: "An outright ban on wheelclamping on private land is a victory for justice and common sense.
"We have been campaigning for a ban against this legalised mugging for many years.
"Too many clampers have been acting like modern-day highwaymen for too long.
"Many elderly and vulnerable people have been ripped off by these callous cowboys. Clamping has been banned in Scotland since 1991 without problems.
"We would also like to see restrictions on the companies that issue bogus tickets on private land so that these cowboys are also driven out of town."
Professor Stephen Glaister, director of the RAC Foundation, added: "For too long unscrupulous clampers have managed to extort money from essentially law-abiding motorists, punishing them for their so-called crimes.
"At last that is going to stop and there will be many who will breathe a sigh of relief after years of outrageous behaviour."
But both organisations warned about the rise of private operators issuing penalty tickets as they turn away from clamping.
Prof Glaister said: "Getting rid of clamping is not the end of disputes about parking on private land.
"Some operators have seen the writing on the wall and are already turning to issuing penalty tickets rather than using clamps and the law needs to recognise this growing form of enforcement.
"What we need is a fair system that protects motorists and landowners. How hard can it be?"
Under current rules, wheel clampers must hold a frontline licence from the Security Industry Authority (SIA), with supervisors or directors holding a non-frontline licence.
Later, Ms Featherstone said: "For too long motorists have fallen victim to unscrupulous tactics by many clamping firms.
"Reports of motorists being marched to cash points or left stranded after their car has been towed are simply unacceptable.
"A ban on clamping and towing on private land will end this abuse and companies who decide to flout new laws will face severe penalties."
Regional and local transport minister Norman Baker added the rules for 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," he said.
"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."
A total of 2,150 individuals are licensed by the Security Industry Authority (SIA) to clamp vehicles, the Home Office said.
But these licences will be stopped once the new ban becomes a law.
The Institute of Advanced Motorists (IAM) said it had sought an end to unfettered wheel clamping for many years.
"As a penalty, wheel clamping is out of all proportion with the loss sustained by private landowners and is universally unpopular among drivers," a spokesman said.
"Current licensing systems do not appear to have had a major impact on the worst excesses of cowboy clampers and the time is now right for a wholesale review of parking controls.
"Banning wheel clamping in Scotland has not produced any obvious problems. The IAM has been working with the parking industry to improve the self regulation of parking on private land and it is important that the Government plays a more active role in improving the whole industry.
"As well as banning wheel clamping, controls are still need on penalty charges, removal of vehicles, the role of private landowners and the use of DVLA information to track offenders."
Writing on her blog, Ms Featherstone said wheel clamping has "always had a track record of grief and misery".
She said one of the solutions considered was the introduction of an independent appeals authority where aggrieved motorists could appeal the fee, but this would have cost £2 million to set up and would simply have been "perpetuating a flawed system".