The changes, being set out in Wednesday's Budget, will see the legal single contactless payment limit raised from £45 to £100.
While legally in force from Wednesday, the increase will not happen immediately, as firms will need to make systems changes.
The banking industry will implement the new £100 limit later this year.
The Government said the increase has been made possible by the UK's exit from the European Union which means it is no longer bound by EU rules on the maximum limit for contactless payment, which is currently set at £45.
"Tap and go" contactless cards initially had a limit of £10 in 2007, and this was increased to £15 in 2010, £20 in 2012 and £30 in 2015. The limit was raised to £45 last April, in the early months of the coronavirus pandemic.
Chancellor Rishi Sunak said: "As we begin to open the UK economy and people return to the high street, the contactless limit increase will make it easier than ever before for people to pay for their shopping, providing a welcome boost to retail that will protect jobs and drive growth across the capital."
The announcement could further accelerate the decline of physical cash use, with banknotes and coins already having been shunned during the coronavirus pandemic. A Bank of England study last year indicated that the risk of catching coronavirus from banknotes is low.
The Government has pledged to legislate to protect the future of cash.
The Financial Conduct Authority (FCA) held a public consultation on contactless limits and recommended the change.
Eight out of 10 UK adults used contactless payments in 2019, and the increase in contactless limits will mean millions of payments will now be made simpler, the Government said.
A report by retail technology firm Ubamarket found that 40 per cent of people in the UK say they will no longer use cash when shopping or when in bars or restaurants, with 50 per cent not having used cash since the start of lockdown restrictions last year.
Chief executive Will Broome said: “The Chancellor has correctly recognised that the circumstances brought about by Covid-19 has called for a new way of doing things.”
However, others warned that the increase could lead to a rise in fraud.
Ray Walsh, digital privacy Expert at digital privacy organisation ProPrivacy said: “Many experts already consider the EU limit of 50 Euros to be high, increasing that to £100 in the UK raises serious concerns over the potential for fraud and even street muggings.”
Pete Wickes, general manager for Europe, the Middle East and Africa at payments processing company Worldpay from FIS said: "It is vital that shops and businesses have sufficient time to implement the changes given the current extraordinary operating conditions.
"Some consumers will also need time to adjust. Our research reveals that around 40 per cent of UK consumers still have lingering doubts about contactless security. Education will be key."