Under the new rules, copyrighted works will be available to use without permission for some "valuable purposes".
Among the changes are provisions to make it easier for teachers to use copyright materials on interactive whiteboards and for institutions to make works accessible over secure networks for distance learning.
The government will also allow non-commercial researchers to use software to mine published research results and other data in order to identify associations and trends. At the moment, researchers require specific copyright permission to mine data from journal articles that they have already paid to access.
Changes to the law will also help archiving as museums, galleries and libraries will be allowed to preserve any type of copyright work that is in their permanent collection and which cannot readily be replaced.
Sound recordings, films and broadcasts will also be allowed to be copied for non-commercial research and private study purposes, without permission from the copyright holder.
The changes follow extensive consultation and put into place a number of recommendations made in the 2011 Hargreaves review of intellectual property and growth, led by Ian Hargreaves, professor of digital economy at the Cardiff School of Journalism, Media and Cultural Studies and a former editor of The Independent.
Nicola Dandridge, chief executive of Universities UK, welcomed the move saying that universities had been operating under laws "designed with the technologies and teaching methods of the last century in mind".
"The proposed changes are balanced and address concerns that Universities UK, and others, have raised about the existing system," she added.
The new measures also include provisions to allow the copying of works for individuals' own personal use, such as transferring music collections from one format to another, as well as for parody and the purposes of quotation.
The Department for Business, Innovation and Skills estimates that the changes could contribute at least ?500 million to the UK economy over 10 years and perhaps much more from reduced costs, increased competition and by making copyright works more valuable.