The measure announced by the home secretary Priti Patel applies to around 2,800 medical staff from overseas whose permits expire before 1 October.
It will also apply to their family members as well, to give frontline workers “peace of mind”, the Home Office said.
Restriction on the amount of hours student nurses and doctors can work in the NHS has also been lifted.
Meanwhile pre-registered overseas nurses drafted in to help with the surge in patients are being given more time to pass their exams.
“Doctors, nurses and paramedics from all over the world are playing a leading role in the NHS’s efforts to tackle coronavirus and save lives,” said the home secretary.
“We owe them a great deal of gratitude for all that they do.
“I don’t want them distracted by the visa process. That is why I have automatically extended their visas – free of charge – for a further year.”
Officials also confirmed the visa extension will be exempt from the immigration health surcharge of up to £400 per year.
Last week MPs raised concerns that key workers from overseas were paying thousands of pounds in visa costs to keep their families in the UK.
Around 153,000 out of the total 1.2 million NHS staff are not British nationals, according to House of Commons statistics.
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