The government currently contributes £22m annually towards the collection. The aim is for the charity to eventually become self sufficient. It was given £80m in the government's Spending Review to manage the change.
The new charity will still be called English Heritage and the 420 sites in the National Heritage Collection - which include many green spaces, London's Kenwood House, and Charles Darwin's home in Kent - will remain in public ownership.
Government funding for the charity will be tapered down from 2015 eventually to nothing, meaning it will have more freedom than now to generate income from commercial activities and philanthropic donations.
In a statement, the government agency described the planned changes, which will be subject to a consultation, as "an excellent outcome".
"This year we have been celebrating 100 years of state protection for heritage and today's announcement sets the scene for the next century.
"The government's £80m investment and the creation of the new charity will help us preserve the National Heritage Collection for the future, be true to the story of the places we look after, to aim for the highest standards in everything we do from our conservation work to the way we run our events and to provide an experience that brings the story of England alive."
English Heritage website here