Councils will be given the power to charge utility companies up to £2,500 a day for digging up the busiest roads at peak times.
The Department for Transport said lane rental schemes, which have been trialled in Kent and London, have helped to significantly reduce delays and could now be rolled out nationwide.
The aim is to incentivise firms to work on quieter roads or outside of rush hour or collaborate with other companies to stop roads being dug up multiple rimes, to reduce the impact of roadworks on drivers and cut congestion.
Street Works UK, the trade body for utilities and their contractor partners on road work issues, previously said the scheme could increase bills for consumers.
According to official figures, around 2.5 million roadworks are carried out every year, costing the economy £4 billion in increased costs to businesses through late employees or deliveries.
In London, utility firms worked together more than 600 times since lane rental was introduced in 2015 – up from 100.
Transport Minister Jo Johnson said: “Drivers often see red when roadworks cause them delays, especially if no one is working on them.
“Lane rental has seen a massive drop in disruption to drivers as utility companies have changed when and where they carry out work. Now we want millions of motorists around England to get the same benefits.”