The new format, the Blu-ray Disc, will store more than 13 hours of film, compared with the current limit of 133 minutes,
It is expected to come into its own as more viewers become able to record TV shows on DVD machines.
The news comes as the UK market enjoyed a DVD sales boost of 149%.
It is a truly remarkable format
"It is a truly remarkable format, marking a new era," according to Shizuo Takashino, vice president of Sony, one of the firms that has worked on the format.
The new discs will be able to hold 27 gigabytes of information - compared with the current limit of 4.7 gigabytes for a standard disc.
However, a double-sided, double-layered DVD disc can store up to 15 gigabytes of information.
But a spokeswoman for one of the companies involved, Philips, told BBC News Online that it will be many years before the Blue-ray DVD players are available in the UK.
She added that the hardware is "still being developed" and was unable to answer questions about whether current DVD discs will be compatible with the new machines.
Manufacturers also said they were developing discs that could hold up to 50 gigabytes.
The new format is called a Blu-ray Disc because a blue laser is able to cram more data onto discs than the red rays currently used.
Masao Sugimoto, executive corporate engineering adviser to Pioneer, said the discs would be "of great significance" to the industry.
Licensing for technology to play the discs will start within the next few months.
The companies had worked together to avoid the problems over standards that plagued DVDs when they were launched.
"You all know the struggle we had to come to one format in DVD. We wanted to avoid that right away," said Jan Oosterveld of Philips.
The arrival of DVD has greatly enhanced the viewing experience
BVA director general, Lavinia Carey
More than 25 million DVD players have been sold since the format was launched in 1996, and the number of films sold on DVD in the UK more than doubled last year.
New figures show the popularity of DVDs helped increase the sales and rental market for films in Britain to almost £2bn last year.
Sales of DVDs in the UK jumped by 149%, while the 25 million DVDs rented last year represented a three-fold increase on the previous year, according to data from the British Video Association.
Lavinia Carey, director general of the BVA, said the simplicity of DVDs is key to its success.
She said: "The arrival of DVD has greatly enhanced the viewing experience and now some of the advantages of DVD are being introduced on cassette, such as bonus material out-takes."
Two million DVD machines were sold last year, worth a total of £284m.