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The Football Association has announced a radical post-Brexit shake‑up that will mean Premier League and EFL clubs cannot sign foreign players until they are 18, with all transfers from European Union nations set to be subject to work permits that will be allocated using a points-based system.

In a controversial move that could have seismic effects on the recent dominance of English clubs over their European rivals, a joint statement from the FA, Premier League and EFL confirmed on Tuesday that the new system, which will come into force when the UK’s transition period after leaving the EU ends on 31 December and has been approved by the Home Office, will also see Premier League clubs limited to signing no more than three overseas players under the age of 21 in any single transfer window and a total of no more than six per season.

Designed to help encourage clubs to produce more homegrown talent, the Governing Body Endorsement (GBE) plan was submitted to the government last month by the FA and will come into effect from 1 January in time for the next transfer window. Similar to the current regulations that require players from non-EU countries to have played a high proportion of international matches, its points-based system will be determined by a number of criteria, including senior and youth international appearances, the “quality of the selling club, based on the league they are in, league position and progression in continental competition” and club appearances, based on domestic league and continental competition minutes. It is understood that players will need 15 points in order to be granted a permit for the UK, with the FA believed to have pushed for a higher threshold.

“Players accumulating the requisite amount of points will earn a GBE automatically, while players just below the threshold may be considered for a GBE by an exceptions panel,” said the statement.

“The system meets the joint objectives of the Premier League and the FA allowing access to the best players and future talent for clubs, as well as safeguarding England teams, by ensuring opportunities for homegrown players. In the Premier League, the number of overseas U21 players a club can sign will be limited to three in the January transfer window and six per season moving forwards. This enables the recruitment of the best players from around the world to train and play together with homegrown talent. The UK’s exit from the EU will also mean that clubs will not be able to sign players from overseas until they are 18. The leading football bodies have also agreed to work together to continue to improve the player pathway system.”

Mark Bullingham, the FA’s chief executive said: “Despite having different starting perspectives on how Brexit should impact football, this is another example of how the football authorities can work effectively together for the greater good of the game. We have a strong working relationship with both the Premier League and EFL and will monitor this new agreement together to ensure it evolves to best meet our joint objectives over time. We will also discuss improvements to the player pathway for the mutual benefit of football clubs and homegrown talent in this country.”

In the women’s game, the entry requirements will not take youth international appearances or the selling club’s progression in European competitions into account.

Richard Masters, the Premier League’s chief executive, said: “The Premier League has worked with the FA to come to an agreement to ensure no part of Brexit should damage the success of the Premier League, or the prospects of the England teams.

“Continuing to be able to recruit the best players will see the Premier League remain competitive and compelling and the solution will complement our player development philosophy of the best foreign talent alongside the best homegrown players. Following the January transfer window, we look forward to reviewing the agreement with the FA.”