Women are to be given the chance to serve in the Gurkhas for the first time.
Defence Minister Derek Twigg said that work was under way to see how women could join the Army's brigade of Gurkhas, which is recruited in Nepal.
The move follows a review of the terms and conditions of the brigade which will see their pensions put on the same footing as the rest of the British Army.
Gurkhas who have served for at least five years will have the opportunity to transfer to other units within the Army to pursue their careers.
They will also be given the same leave entitlements as other serving soldiers.
Mr Twigg said: "This is the right thing to do. As a Government, we have continually sought to ensure equality amongst our workforce here in the UK.
"The improved terms and conditions of service will form the basis for continued Gurkha service in the British Army."
The new pension arrangements will apply to those Gurkhas who retired on or after July 1, 1997.
The announcement will fail to satisfy those veterans who left the Army before that date and who have been campaigning for equal pensions.
