The 'Sustainable Farming Incentive' will replace the EU's £2.4 billion single agricultural policy.
The EU's Common Agricultural Policy rewarded farmers based on the amount of land they farmed. So, the more land they had, the more money they got.
The Government will keep the £2.4 billion in EU agriculture subsidies until 2024, but decrease the £1.8 billion in direct payments to farmers.
Money saved will go into a new "landscape recovery" scheme.
It will compensate farmers for environmental protection rather than paying them to grow crops and raise cattle.
"Ensuring a vibrant and prosperous food and farming economy," says Environment Secretary George Eustice.
In the UK, agriculture is responsible for almost 10% of greenhouse gas emissions.
The Country Land and Business Association (CLA) called the plan "progressive and environmentally responsible."
The Wildlife Trusts, National Trust and RSPB said it was a 'great disappointment'.
The plan rewards the status quo rather than encouraging farmers to reduce pollution and soil erosion, the charities contend.
Legumes, which boost soil health, are required on only 15% of land, they said.
"We were promised that the billions of pounds of taxpayers' money granted to farmers would be used to better our natural world," said Wildlife Trusts' Craig Bennett.
In his opinion, the Government's failure to grab this critical opportunity is a scandal.