Deputy Prime Minister Nick Clegg said the proposals "challenge the old-fashioned assumption" that women should always be the parent that stays at home.
Working couples will be able to share any remaining leave and pay they have after the two-week recovery period mothers must take off after birth, according to details of the scheme published by the government.
At the moment, new mothers can take a maximum of 52 weeks off while fathers are entitled to two weeks of statutory paternity leave.
Mothers are entitled to 90 percent of their average weekly earnings for the first six weeks after childbirth, followed by Ģ136.78 ($223.53, 164.31 euros) a week for the next 33 weeks.
Under the new plans, due to come into effect in April 2015, parents will be able to share the remaining 50 weeks of leave and pay immediately after the birth.
Reforms will also allow parents to ask for discontinuous blocks of leave, but the employer will have the right to refuse the request.
"Women deserve the right to pursue their goals and not feel they have to choose between having a successful career or having a baby," said Clegg.
"We want to create a fairer society that gives parents the flexibility to choose how they share care for their child in the first year after birth.
"We need to challenge the old-fashioned assumption that women will always be the parent that stays at home - many fathers want that option too.
"This is good for families, good for business and good for our economy."
An initial plan to increase paid paternity leave has been shelved as "unaffordable", but Clegg promised to review the option when the economy was in a stronger position.