Landlords will be banned from refusing to rent to people on benefits or people with children under government schemes.
Amendments tabled on Wednesday to the Tenants (Reform) Bill aim to ensure families are not discriminated against and the vulnerable are protected, the government said.
However, landlords will still be able to carry out reference checks to establish rent affordability and “have the final say on who they let their property to”.
The measures will apply to England and Wales, with a further amendment at the report stage of the bill extending them to Scotland.
The government has also announced that a decent housing standard, previously applied to social housing, will be introduced to the private rented sector for the first time.
The new standard will provide clarity on what tenants should expect from their home and ensure it “is safe, warm and decent”, the government said.
Quality requirements for homes will be set after consultation and designed to meet the government's target of reducing poor standards in rented homes by 50% by 2030.
Under the plan, local authorities will also be given new enforcement powers to force landlords to bring properties up to standard, with fines of up to £30,000 along with banning orders for the worst offenders.
The period for which tenants can claim back rent for accommodation in poor conditions will be extended from 12 to 24 months.
Councils will also be supported to improve their ability to investigate landlords who rent substandard homes, ensuring they can identify and take enforcement action against “the criminal minority and help drive them out of the industry”.
Housing Secretary Michael Gove said the measures would significantly reduce the unacceptable number of people currently living in poor conditions.
He added: “As part of our long-term plan for housing, we are improving housing standards across the private rented sector, while also ending discrimination against vulnerable people and families who are unfairly denied access to a home.”
Amendments to the bill will now be considered at committee stage in the House of Commons.
The bill is described as a “once-in-a-generation change to housing law.”
It includes a ban on no-fault evictions and the creation of a new ombudsman to resolve disputes between tenants and landlords more quickly.
The government has confirmed that the abolition of no-fault evictions will not take place until reforms to the justice system are implemented, leading to accusations of a lack of urgency.
The bill will also strengthen the grounds on which landlords can bid to repossess properties, with the aim of making it easier to repossess properties where tenants are found to be exhibiting anti-social behavior or regularly racking up rent arrears.
A housing minister has spoken of her disappointment at being sacked as she makes way for the 16th person to hold the role since 2010.
Conservative MP Rachel Maclean was ousted as housing minister in Monday's reshuffle and replaced by Lee Rowley, the 16th person to hold the role since 2010.
Campaign group Renters Reform Coalition criticized the timing of the amendments to the bill, saying publishing 111 pages of details on the amendments while the committee stage is in “full swing” undermines scrutiny.
Campaign manager Tom Darling said: “These proposals should have been available for comment and input for weeks – it is ridiculous to expect politicians and experts to scrutinize over 100 pages of amendments, with some giving oral evidence as soon as tomorrow.
“It doesn't help that this is happening the day after the housing minister was sacked and it's still unclear which government minister is now actually responsible for this crucial piece of legislation.”
Homeless charity Shelter welcomed the substance of the amendments.
Chief executive Polly Neate said: “Even when people can afford the rent, they end up homeless because of this unfounded prejudice.
“Once illegal, the government should not let more subtle forms of discrimination replace blanket prohibitions.”