A Conservative government would end inheritance tax on family homes worth up to £1m, David Cameron is to announce.
It means more owners of homes in the UK would be able to pass them on to their children without paying tax.
The policy is likely to be at the centre of the Tory election manifesto, which will be launched next week.
Labour said the Tories had promised such a move before the last election and did not deliver.
Labour has been setting out plans to raise an extra £7.5bn a year through closing tax loopholes and imposing bigger fines on tax avoiders.
The £1bn cost of the Conservative policy will be paid for by reducing tax relief on the pension contributions of people earning more than £150,000, says the party.
At present, inheritance tax is payable at 40% on the value of an estate in excess of the tax-free allowance of £325,000 per person. Married couples and civil partners can pass the allowance on to each other.
If the Conservatives win the general election 7 May, parents will each be offered a further £175,000 allowance to enable them to pass property on to children tax-free after their death.
The new “family home allowance” will be transferable on the death of one spouse and can be added to the existing £325,000 transferable allowance to bring the tax-free total up to £1m.
The full amount would be transferable even if one member of a married couple has died before the policy comes into effect, the Conservatives say, and so would benefit existing widows and widowers.
For properties worth more than £2m, the new allowance would be gradually reduced, so that those with homes worth more than £2.35m would not benefit at all.
The new allowance would come into effect in April 2017 and be available to married couples and civil partners, even if one of them has died before that date.
In a speech on Sunday, Mr Cameron will say: “That wish to pass something on is about the most basic, human and natural instinct there is. And that’s why for a long, long time I have wanted to act on inheritance.
“We’ve already done some important things. With the Conservatives, people can pass on their ISAs – and they’ll be able to pass on their pension pot tax-free.
“And I can tell you today that the next Conservative government would go much further. We will take the family home out of inheritance tax.
“That home that you have worked and saved for belongs to you and your family.
“You should be able to pass it onto your children. And with the Conservatives, the tax man will not get his hands on it.”
Chancellor George Osborne told the Mail on Sunday that people who wanted to pass on their family home should be “supported” and not “penalised”.
But shadow treasury secretary Chris Leslie, for Labour, said the policy was the latest “panicky promise” from the Conservatives.
He said: “The Tories made a promise on inheritance tax before the last election and they broke it.
“At a time when our NHS is in crisis and most working people are paying more under the Tories, it cannot be a priority to spend £1bn on a policy which the Treasury says would not apply to 90% of estates.”
Liberal Democrat Chief Secretary to the Treasury Danny Alexander said the Conservatives had “the wrong priorities”.
He added: “It is extraordinary that the Tories will go into great detail on a policy that will cut tax for a small number of estates, but steadfastly refuse to give any detail at all on the massive cuts to public services that they desire.
“To make this promise with such a huge black hole at the heart of their plans is a sign of desperation from a Tory Party that knows it can’t win the election.”