Newly diagnosed mesothelioma sufferers who developed the disease after being exposed at work will be able to receive help through the support scheme.
Many sufferers are unable to claim compensation from employers because the disease takes many years to develop and the companies they worked for may no longer exist.
Introducing the Mesothelioma Bill, the Queen's Speech said: "Legislation will be introduced to ensure sufferers of a certain asbestos-related cancer receive payments where no liable employer or insurer can be traced."
Officials estimate that 3,500 victims who are not currently able to claim compensation will receive £355 million over the next 10 years. The money will come from a levy on insurers which provide employers' liability. Anyone diagnosed with mesothelioma after July 25 last year can make a claim.
Mesothelioma - a cancer of the lining of internal organs - kills more than 1,800 people in the UK every year. It is estimated that 300 people a year receive no civil compensation because their employer's insurer cannot be traced.
Construction workers union Ucatt said the plans to introduce compensation for asbestos victims were "greatly watered down".
Steve Murphy, general secretary of the union, said: "Deaths from asbestos are entirely preventable. For decades governments and employers knew the risks but chose to do nothing. It is disgraceful that even now they are trying wherever possible to deny workers compensation.
"This watered-down scheme, which denies compensation to many victims and slashes compensation to those who qualify, demonstrates that the Conservatives are in the pocket of the insurance industry."