The plans were unveiled this week during a state visit by Chinese President Xi Jinping.
The changes look to cash in on the wealth of China’s burgeoning middle classes by reducing red tape and costs around visiting the UK.
Chinese visitors are normally issued with a six-month tourist visa at a cost of £85.
But from 2016 tourists will - for the same price - be able to obtain a two year visa which allows the user to take numerous trips from China to the UK without additional paperwork.
A ten year multiple entry visa is also expected to be introduced at no extra cost for Chinese visitors.
The plans could boost the number of UK tourists by 256k each year and inject £337m in to the economy, according to the UK China Visa Alliance (UKCVA).
The Prime Minister hailed the plans as ‘great news’ for the British tourism industry.
“China is becoming one of our fastest-growing tourism markets so making it easier and more convenient for Chinese visitors to come to the UK is extremely important,” he said.
“It will mean that the UK has the best offer in Europe for Chinese tourists and will build on our already strong people to people links, strengthening UK-China relations further.”
The number of Chinese tourists visiting London has risen by 112 per cent since 2009, with visitors contributing £500m annually to the UK economy.
Oxford Economics anticipates that spending will grow by an additional 77 per cent over the next eight years, with China set to become the largest outbound tourism economy in the world by 2023.
Gordon Innes, CEO of London & Partners, the Mayor’s official promotional company for London, said: “This is fantastic news for London and its Chinese visitors, who are already coming to the capital in record numbers and spending more than ever.
“We [are] working closely with partners across the industry to promote the capital to Chinese tourists and develop initiatives to boost the numbers of visitors coming to London from China in the future.”