The government is to unveil a legal measure it says will protect UK troops from “vexatious” legal claims.
The change in policy, to be announced at the Conservative conference, would mean parts of the European Convention on Human Rights (ECHR) could be suspended during future conflicts.
Much of the litigation faced by the Ministry of Defence comes from claims under the ECHR, the government says.
Defence Secretary Michael Fallon said the legal system had been “abused”.
“It has caused significant distress to people who risked their lives to protect us, it has cost the taxpayer millions and there is a real risk it will stop our armed forces doing their job,” he said.
Mr Fallon said the change being announced at the Tory conference in Birmingham would be “an important step towards putting that right”.
It would mean than in future conflicts, subject to a vote of both Houses of Parliament, the UK would “derogate” from Article two (right to life) and Article five (right to liberty) of the ECHR.
Ministers said troops would still be subject to other articles of the convention, including a prohibition on torture, as well as UK criminal law and the Geneva Conventions.
The former Conservative Attorney General Dominic Grieve welcomed the proposal but said it was not a “magic formula” which is suddenly going to ensure British military will not face claims in future.
The Ministry of Defence said it had spent over £100m on Iraq-related investigations, inquiries and compensation since 2004.
But there has been criticism of the scale of claims lodged using legal aid with the Iraq Historic Allegations Team (IHAT), which was set up to examine serious allegations following the 2003 invasion.
The team, headed up by former senior civilian police officer Mark Warwick, has considered at least 1,514 possible victims – of whom 280 are alleged to have been unlawfully killed.
The claims range from ill-treatment during detention to assault and death by shooting.
It was also recently revealed that an independent policing unit set up to investigate alleged war crimes by British troops in Afghanistan had received around 600 complaints.
The cases being probed are said to include that of a Taliban bombmaker who claims his arrest and detention was illegal.
In their 2015 general election manifesto, the Conservatives promised to “ensure our armed forces overseas are not subject to persistent human rights claims that undermine their ability to do their job”.
The prime minister raised the issue during a meeting last month with Chief of the Defence Staff Air Chief Marshal Sir Stuart Peach, the heads of the Royal Navy, Army and Royal Air Force, and senior civil servants.
Mrs May and Mr Fallon will announce the new “presumption to derogate” from the ECHR at the Conservative conference in Birmingham.
They will say court rulings have extended the ECHR’s jurisdiction in recent years to the battlefield.
Mr Fallon said: “Our legal system has been abused to level false charges against our troops on an industrial scale.
“It has caused significant distress to people who risked their lives to protect us, it has cost the taxpayer millions and there is a real risk it will stop our armed forces doing their job.”
He said the change in policy would “help to protect our troops from vexatious claims and ensure they can confidently take difficult decisions on the battlefield”.
Mrs May added: “Those who serve on the frontline will have our support when they come home.
“We will repay them with gratitude and put an end to the industry of vexatious claims that has pursued those who served in previous conflicts.”
Tory MP Johnny Mercer, a former Army captain who served in Helmand province and has campaigned on the issue, responded to the expected announcement by tweeting: “Delighted to have some success on this. This affects operational capability; we now have a more effective military than we did before this.”
He later added: “I think this is the first step in closing the gap that exists in this country today between politicians and those who serve.
“To continue to try and apply human rights laws in combat represented a fundamental misunderstanding by ministers about what we are asking our people to do to keep us safe.”
The move was also welcomed by Reg Keys, whose 20-year-old son Tom was killed while guarding a police station in Iraq in 2003.
He has been involved in a campaign against the legal cases and said: “I would like to think that those already under threat of prosecution will be looked at again”.
But the planned crackdown has been criticised by Lt Col Nicholas Mercer, the former chief legal adviser for the Army in Iraq, who said it was wrong “simply to polarise it as money-grabbing lawyers”.
“There are plenty of us who have raised our concerns without any financial motive at all, if indeed the other lawyers have got a financial motive,” he said in January.
“The government have paid out £20m for 326 cases to date. Anyone who has fought the MoD knows that they don’t pay out for nothing.”