A legal ban on weapon-toting protection staff will be relaxed so that firms can apply for a licence to have them on board in danger zones.
David Cameron said radical action was required because the increasing ability of sea-borne Somali criminals to hijack and ransom ships had become “a complete stain on our world”.
He unveiled the measure after talks at a Commonwealth summit in Australia with leaders of countries in the Horn of Africa over the escalating problem faced in waters off their shores.
Under the plans, the home secretary will be given the power to license vessels to carry armed security, including automatic weapons, currently prohibited under firearms laws.
Officials said around 200 were expected to be in line to take up the offer, which would only apply for voyages through particular waters in the affected region. It is expected to be used by commercial firms rather than private sailors – such as hostage victims Paul and Rachel Chandler.
‘A stain on our world’
Asked if he was comfortable with giving private security operatives the right to “shoot to kill” if necessary, Mr Cameron told BBC1’s Andrew Marr Show: “We have to make choices.
“Frankly the extent of the hijack and ransom of ships round the Horn of Africa is a complete stain on our world.
“The fact that a bunch of pirates in Somalia are managing to hold to ransom the rest of the world and our trading system is a complete insult and the rest of the world needs to come together with much more vigour.
I want to help lead this process and as part of that we are going to be taking the step of putting armed guards on our ships.”
Evidence from other countries with more relaxed regulations over armed guards was that their ships did not get targeted, he said.
“We are going to have to license that in a proper way, the Home Office has agreed to do that. But I think this is a big step up for our campaign against this piracy.”
Other counter-piracy measures being taken include offering support from Treasury officials to Kenya to help them track down pirates’ assets.
Mr Cameron also said help could be given to countries such as The Seychelles and Mauritius, both represented at the Commonwealth Heads of Government Meeting in Perth, who were acting to bring pirates to court and imprison them.