The temporary removal of cost disclosure requirements will mean the investment trust sector can "regain its footing".
The government and Financial Conduct Authority have announced they will temporarily exempt investment trusts from complying with cost disclosure rules.
It comes as work is underway to replace EU regulations with new rules for UK markets.
Richard Stone, chief executive of the Association of Investment Companies called the change a "leap forward" for investment companies and their investors, which paves the way for a permanent solution.
He said: "Investment companies are a great UK success story and have a vital role in bridging the gap between private assets and public markets.
"Ending misleading cost disclosures will enable us to continue delivering for investors and make a critical contribution to the economy as the government drives forward its ambitions for growth, investment and wealth creation."
While Ryan Hughes, interim managing director at AJ Bell Investments, said the changes will be "warmly welcomed" by the industry.
He said: "Investment trusts play a hugely important role both in the financial services sector and the wider economy as a provider of capital and the unintended consequences of the current legislation created an unequal playing field that put investment trusts at a disadvantage and threatened, in some cases, their very existence.
"The removal of this unnecessary barrier will help the investment trusts sector regain its footing and allow them to compete equally against other investment structures, which will put them back on the radar for investors who have been reluctant to use them given the cost disclosure requirements."
The temporary exemption is part of government plans to replace EU-inherited Packaged Retail and Insurance-based Investment Products (Priips) regulation with a new framework for Consumer Composite Investments (CCIs).
The Treasury said it will bring these changes in "as soon as possible" and give the FCA powers to deliver the reform.
The new retail disclosure regime is expected to be rolled out in the first half of 2025.
A statement this morning read: "The proposed new CCI regime is intended to better cater for a variety of products and investment vehicles, including investment trusts, while still ensuring consumers receive appropriate information to allow them to make meaningful choices between investment opportunities about composite consumer investments."
Gravis’s William MacLeod called the breakthrough "momentous".
He added: "Even though the forbearance is to take place with immediate effect, I suspect it will be November before this washes through. The database for costs, the EMT, is updated monthly, so to may take a few weeks to be cleansed.
“Thereafter, we should all be focused on proposals for the new CCI regime. It is momentous breakthrough that is long overdue."
MacLeod said the campaign for changes were helped by Baronesses Sharon Bowles and Ros Altman, who both took up the cause in the House of Lords.
