The Government previously increased the maximum discount on homes bought through the Right to Buy scheme to £75,000 in April.
The maximum discount cash cap in London, where the Government says the current cap is most keenly felt, will be increased further to £100,000 from 25 March.
The Right to Buy scheme previously offers tenants with five-years tenancy to purchase the home they are living in from local authorities. This has now been reduced to three years.
Housing minister Grant Shapps said the revised scheme would not reduce the number of affordable homes in the country as any homes bought under Right to Buy would instead lead directly to the provisions of new affordable homes for rent.
There are also plans for the Government to simplify the Right to Buy application process for both local authorities and prospective tenants.