Parents will be able to buy baby formula in supermarkets using loyalty points and vouchers as part of a Government plan to make baby milk more affordable.
The price of baby food has risen sharply in recent years, with a standard jar costing between £12 and £15.
The change aims to give families confidence to choose cheaper options, which the government and consumer watchdog estimate could save up to £500 a year for those who can't or don't want to breastfeed.
Charities were concerned that low-income families were diluting the formula or struggling to pay for other essentials because it was too expensive.
Under the new measures, parents will be given clearer guidance on the nutritional standards that all infant formula sold in the UK must meet, and retailers will be encouraged to provide the same.
Some retailers had previously stressed that rules banning direct or indirect promotion of baby food prevented them from discounting it, and were unsure whether people would be able to use loyalty schemes to buy milk.
The infant formula market is currently regulated so that promotions such as loyalty points or discounts are prohibited, as are sales of tobacco products and lottery tickets.
This is to encourage breastfeeding, which the NHS says is healthier for babies. But in its interim report in February, the CMA warned that it also prevents companies from competing on price, which inadvertently forces consumers to pay more.
In this reportThe CMA also noted that the price difference between brands is so large that in some cases families could save around £540 a year by choosing the cheaper version of the formula.
Just three companies account for about 90% of the infant formula market: Danone, Kendal and Nestle.
Competition and Markets Authority (CMA) looked at this sector at the beginning of the yearand recommended making it clear to parents that all products on shelves meet nutrition standards, so families are not forced to buy more expensive brands out of fear that their child will get the best start.
Announcing changes to Prime Minister's Questions on Wednesday, Sir Keir Starmer said that for too long parents had been “forced to spend more on baby food than necessary”.
“We will take action to give parents and carers the confidence to access baby food at more affordable prices… with clearer guidance for retailers and helping new parents use loyalty points and vouchers,” he said.
He was later criticized by Speaker Sir Lindsay Hoyle for making a political statement on the Prime Minister's Office.
Health Secretary Wes Streeting said it was “wrong” that manufacturers were able to package their products in a way that took advantage of new parents who are concerned about what is best for their baby.
“These new measures mean parents will have confidence in the formula they buy, regardless of price, and will now be able to make the most of supermarket loyalty programs,” he said.
Shereen Fisher, director of UNICEF's Child Friendly Initiative, welcomed the move, saying baby food is a “basic need”.
“For too long, families have been overpriced for this important product. The CMA has shown that many formulas are significantly overpriced and many families are struggling as a result,” she said.
“Today’s announcement marks the first step toward addressing these challenges, increasing access and strengthening support for children’s nutrition.”
The announcement was also welcomed by children's feeding charity Feed.
Its chief executive, Claire Murphy, said: “We are pleased to see clarification that there is no law prohibiting the use of vouchers and loyalty points when purchasing baby food, a ridiculous restriction that simply stigmatizes and penalizes families for their nutritional decisions.”
Andrea Martinez-Inchausti, deputy director of food at the British Retail Consortium (BRC), said the government's proposed next steps were sensible.
“We look forward to working through the details with them to make the necessary changes.”
Other CMA recommendations that the government has agreed to accept in principle include ensuring that all infant formula is displayed together, separately from other formula milk, and clarifying what is considered advertising.
The government said further action is needed on other recommendations, including banning unverifiable messages on infant formula and follow-on formula labels, and extending restrictions on follow-on formula advertising.
A CMA spokesman said the watchdog stands ready to support governments and agencies across the UK in either implementing its recommendations or advising on measures that remain under review.
Authorities in all four decentralized countries agreed with the government's response.
