The ICC said after its two-day executive meeting in Melbourne that it had adopted a recommendation allowing bowlers to straighten their arms by up to 15 degrees.
The new rule, which will come into effect from March 1, means that most bowlers currently under investigation for chucking will be cleared to resume playing.
ICC chief executive Malcolm Speed hailed the controversial rule change as a breakthrough for cricket though he admitted there were bound to be some critics.
"This issue has afflicted the game for over sixty years. Try as it might, the sport has never properly come to terms with it," Speed said in a statement.
"Every time it comes up there are emotional reactions from people around the world based on fear and ignorance and I've no doubt we will see them all again this time.
"The reality is that this new process provides the game with a sensible way forward to properly protect against people breaking the rules while providing every opportunity for players with illegal actions to remedy any problems and return to the game."
The ICC ordered a review of its laws on throwing after a spate of cases in recent years.
Emotions began to boil over as several top international players, including Sri Lanka's former world record holder Muttiah Muralitharan, were reported for suspect actions.
An expert panel comprising Aravinda de Silva, Angus Fraser, Michael Holding, Tony Lewis, Tim May and David Richardson found that most modern bowlers broke the rules in some way but the laws to determine whether their action was legal or otherwise were murky and unworkable.
NAKED EYE
The old laws effectively allowed spinners to legally straighten their arms by five degrees. The measurement was set at 7.5 degrees for medium pacers and 10 for fast bowlers.
However, the panel found those measurements were all undetectable to the naked eye so they recommended the levels be standardised at 15 degrees, the first point at which it is visible to the naked eye.
"These recommendations have come from people who have played the game at the highest level and who have a deep appreciation of the issues," ICC Cricket Committee chairman Sunil Gavaskar said.
"While the scientific evidence presented made the case for changing the current bowling review process compelling, it is a cricketing decision, proposed by cricketers for cricketers.
"The changes should make the process quicker and fairer to all players and will promote consistency in the way in which reported bowlers' actions are dealt with."
The ICC said the committee's decision to overhaul the system would also include changes in the testing, analysis and review procedures.
The committee also announced the introduction of a shorter, independent review process under the central control of the ICC with immediate suspensions for bowlers found to have illegal actions.
