The event played in one location over seven days in November could start next year, pending approval by the ITF Board.
In a statement outlining a 25-year, $3 billion (2.13 billion pounds) partnership with investment group Kosmos, whose founder and president is Barcelona and Spain soccer player Gerard Pique, ITF President David Haggerty said it would be a game-changer for tennis.
"Our vision is to create a major season-ending finale that will be a festival of tennis and entertainment, featuring the world's greatest players representing their nations to decide the Davis Cup champions," he said.
The new event represents a huge revamp for the Davis Cup which has been in existence since 1900 but has suffered in recent years with top players not turning out for their nations.
World number one Roger Federer has not played for Switzerland since 2015 while Rafael Nadal has only played one doubles rubber for Spain in the past two years.
In the current format employed since 1981, 16 World Group nations take part in a knockout competition over three weekends in February, July and September before the final in November.
Ties are hosted by one or other of the competing nations, producing a partisan atmosphere which has become a popular feature of the Davis Cup.
Each tie is best-of-five-matches, four singles and one doubles.
The investment from Kosmos will include significant increases in prize money for players and ITF member nations, according to the sport's London-based governing body.
Haggerty said a prize pool of $20 million would be up for grabs for the 18 qualifying nations.
"This is a complete game-changer for the ITF and for tennis," he said.
RECORD LEVELS
"This new partnership will not only create a true World Cup of Tennis, but will also unlock record levels of new investment for future generations of tennis players and fans."
The ITF said several "world-class" cities from several continents had expressed interest in hosting the new event.
The plans will be submitted to the ITF Annual General Meeting, to be held in August in Orlando, Florida and a two-thirds majority will be required for final approval.
"Kosmos is thrilled to join in this exciting partnership with the ITF," Pique said.
"Together we can elevate Davis Cup by BNP Paribas to new heights by putting on a must-see World Cup of Tennis Finals featuring the top nations and top players."
The event would be run on a round-robin format before a knockout phase with matches consisting of two singles and one doubles rubber. Ties will be played over one day with matches using a best-of-three-set format.
Sixteen World Group nations will automatically qualify for the Finals, with a further two nations to be selected.
The eight teams failing to qualify for the quarter-finals would then play off against the eight zonal Group One qualifiers to try to qualify for the following year's Finals.
Zonal Groups I and II home-and-away ties will continue to be played during the traditional three weeks of the calendar.
(Reporting by Martyn Herman, editing by Ed Osmond)
