Claims farmers will be regulated by statutory legislation in the Compensation Bill to be published in November, the government has confirmed.
With the launch on Monday of a White Paper setting up a new legal services framework, the statutory regulation of claims framers was rubber stamped by the Lord Chancellor, Lord Falconer.
The Compensation Bill will now be published on 1 November instead of two weeks later as planned.
It will deal with what the Department of Constitutional Affairs describe as "gaps in regulation".
Dan Vale, head of policy for the Citizens Advice Bureau, said: "We believe the government should now take the debate further by looking at the whole way that compensation is delivered."
The White Paper, The Future of Legal Services- Putting Consumers First, also outlined plans to create an Office for Legal Complaints (OLC) to independently investigate complaints. It also proposed that a Legal Services Board (LSB) be established to regulate legal services.
The White Paper also said different kinds of lawyers and non-lawyers would be able work together on equal footing to provide legal and other services.
It is anticipated that these changes will take two years to fully implement.
Legal expenses provider DAS chief executive Paul Asplin said the company would now be looking at ownership of solicitors firms. "The proposals will help us deliver our products at a lower cost."