At their meeting in Dublin, UEFA's Executive Committee finalised plans to introduce the event, with the working title 'UEL2' and featuring 32 teams in the group stage, in the 2021 to 2024 competition cycle.
The Europa League group stage, meanwhile, will be reduced from 48 teams to 32.
UEFA said that the Champions League would remain unaltered, meaning that the four top-ranked leagues -- currently Spain, England, Germany and Italy -- would each keep four guaranteed places in the group stage.
"No changes will be made to the format and access list of the UEFA Champions League," said UEFA.
The umbrella organisation representing Europe's domestic leagues had asked UEFA to reduce the number of places guaranteed to teams from the top leagues, reversing changes made for the current cycle.
UEFA said the new setup would ensure that at least 34 countries would be represented in the group stages of UEFA club competitions, compared to today's total of 26.
"The new UEFA club competition makes UEFA's club competitions more inclusive than ever before," UEFA President Aleksander Ceferin said.
"There will be more matches for more clubs, with more associations represented in the group stages. This competition was borne out of ongoing dialogue with clubs through the European Club Association."
The format will see eight groups of four teams, followed by the round of 16, quarter-finals, semi-finals and final. Like the Europa League, matches will be played on Thursdays.
As with the established competitions, there will also be four rounds of qualifying matches played in July and August.
An additional knockout round will be played before the round of 16 between teams ranked second in their groups and the third-ranked teams in the groups of the Europa League, which will run concurrently.
Similarly, the teams finishing second in the Europa League groups will play in a knockout round against teams ranked third in the Champions League groups for a place in the Europa League round of 16.
The seventh-placed teams in Europe's four top-ranked leagues will qualify directly for the final qualifying round of the new competition.
Teams entering the early qualifying rounds of the new competition will be mainly those finishing second, third and fourth in Europe's smaller leagues.
Teams eliminated in the Europa League qualifiers will also drop down to the new competition.
The new competition will feature 141 matches over 15 match weeks, exactly like the Europa League. The winners of the new competition will be entitled to participate in the Europa League in the following season.
(Reporting by Peter Hall; additional reporting by Brian Homewood; Editing by Ian Chadband and Clare Fallon)
