The plans mean that customers will see compensation credited to their account when repairs are slow, appointments are missed or installations delayed, without having to submit a claim.
It calculated the change would bolster levels of redress to customers - including many small businesses - by 900% because compensation was now only paid in about one in seven cases. The new system will make it quicker and easier for customers to be compensated when things go wrong.
Problem: missed appointments. If an engineer misses an appointment or does not give 24 hours' notice of cancellation, £25 compensation will be paid.
Set out by telecoms regulator Ofcom, the new rules will see Britons pocket an estimated £142m in redress - around nine times what they now receive.
Under the new rules, if repairs to service are delayed following an outage, customer will get £8 for every calendar day on which the service is not repaired, after two full working days.More news: Markets stay flat even as Sensex, Nifty face more losses
"Waiting too long for your landline or broadband to be fixed is frustrating enough, without having to fight for compensation", said Lindsey Fussell, Ofcom's consumer group director.
"So providers will have to pay money back automatically, whenever repairs or installations dont happen on time, or an engineer doesnt turn up".
Your new landline or broadband service is not up and running on the day promised.
If you've recently suffered a botched broadband installation or endured a long, internetless wait for line repairs, this won't help much as it doesn't kick in until 2019.
Ofcom said launching the automatic compensation scheme "will be complex and require significant changes to providers' billing systems, online accounts and call centres" so it is looking to implement it within 15 months. BT offshoot Plusnet and EE are also said to be joining. Other providers could agree to sign up in the future. The others include: ensuring lower charges for vulnerable landline customers, better information on broadband speeds before entering a contract, detailed information to show customer how different providers perform and fining companies for poor behaviour. The regulator says it will monitor the scheme and review it a year after implementation to make sure it is working for customers otherwise it will step in.