The Cabinet Office has announced a reduction in the number of Whitehall security classification levels from six, to just three: Top Secret, Secret, and Official.
It hopes that this will bring a system, which hasn't changed since World War II, into a digital age, allowing information be shared easily on standardised IT.
The new markings will be used by over 700,000 civil servants and military personnel from April 2014, and are set to be adopted by the wider public sector at a later unspecified date.
According to the Cabinet Office, the previous six-tiered system dates from a time when civil servants worked exclusively with paper. Whereas today, clerical processes are carried out using IT and the outdated classifications have led to unnecessary controls, complexity, and "misunderstandings that obscure common sense protections."
Cabinet Office Minister Francis Maude said that reforming the system will help save the taxpayer money and enable government to buy standardised IT, rather than costly bespoke systems to secure information that doesn't need securing.
"Whitehall uses a security classification system designed decades ago. We are changing that and introducing a new system fit for the digital age. It will speed up decisions, make it easier to share information and save hard-working taxpayers' money," said Maude.
"There has been a tendency to over mark documents rather than to manage risk properly. This can devalue the basic security principles."
He added: "We think the most important and sensitive materials should be protected as 'Top Secret' or 'Secret' but for other information the new 'Official' category, with its renewed emphasis upon personal responsibility and accountability, will be appropriate for most of what government does."
The 3 new security classifications are:
OFFICIAL - The majority of information that is created or processed by the public sector. This includes routine government businesses, public service delivery and commercial activity. The new 'Official' classification will cover 90 per cent of government business and is based on commercial good practice.
The new system gives managers the opportunity to be clear in their expectations of staff, said the Cabinet Office. In turn, civil servants will be required to use their own judgement much more actively rather than just over-classifying in order to avoid responsibility.
SECRET - Very sensitive information that justifies heightened protective measures - for example, where compromise could seriously damage military capabilities, internal relations or the investigation of serious organised crime.
TOP SECRET - The most sensitive information requiring the highest levels of protection from the most serious threats - for instance, where compromise could cause widespread loss of life or else threaten the security or wellbeing of the country or friendly nations.