The Visitor Levy Bill has been introduced to parliament.
The Bill would give local leaders news powers to invest more in high streets, cultural sites and other attractions
Mayors and other local leaders will have the ability to introduce a small fee on overnight stays, with all money raised staying in the local area.
The money could be spent on things like public toilets and parks, cultural events and security and destination promotion.
In order to protect lower cost family breaks, the levy will be charged as a percentage of the cost of the accommodation, not a flat fee.
Ten mayors have already committed that any levy introduced in their areas would be no higher than 5 per cent.
Secretary of State for Housing, Communities, and Local Government Angela Rayner said: "Millions of people visit our wonderful towns and cities each year, and it’s right that our communities should be able to feel the benefit of that footfall.
"Every pound raised through these levies will stay in the local area. Whether that’s better transport, thriving high streets, or more attractions that keep visitors coming back.
"This is about giving mayors and local leaders the choice to invest back into what matters most to local people, while protecting lower-cost stays and making sure businesses have their say."
Bev Craig, Mayor of Greater Manchester said: "In Greater Manchester, we campaigned for an Overnight Visitor Levy to boost our region and give mayors the powers to raise additional funds through a modest levy on overnight stays. This would give us access to new funding that we can reinvest into our places to support our visitor economy, improve public services and drive good growth.
"In Manchester we pioneered a similar scheme in recent years which has been a resounding success. Our industry-led City Visitor Charge has shown that the model can work, generating millions of pounds that has been invested back into things like street cleaning and our work to attract major events, with widespread support from the hospitality sector.
"The Overnight Visitor Levy also represents a major moment for devolution and a further vote of confidence in the ability of mayors and local leaders to make decisions in the best interests of their places. It means we can attract more events, make our region more welcoming for tourists with cleaner streets and invest in long term projects like extending the tram network.
"The important thing now is that this is genuinely devolved. Any levy needs to work for our city region and be shaped with our councils, businesses and the local hospitality sector, with the money raised here being used for the benefit of people and businesses in Greater Manchester."