A 7p charge for a plastic carrier bag is expected to be introduced in stores in Wales from spring 2011.
The mandatory charge will apply to each single use bag provided by shops and supermarkets.
Environment Minister Jane Davidson says it was needed to change shopping habits and cut the number of environmentally damaging bags dumped in landfill sites.
The British Retail Consortium says the "really disappointing" charge would especially hit low income families.
But has been welcomed by campaigners Keep Wales Tidy.
More than 400m carrier bags are used in Wales each year. It could take up to 1,000 years for some bags to degrade.
Whilst doing so, they release harmful greenhouse gases into the environment.
Environment Minister Jane Davidson said while reducing the number of carrier bags would not solve all Wales' environmental problems, it would deliver an important message about the need for people to live much more sustainable lives.
She said: "I believe the seven pence charge is high enough to encourage consumers to change their shopping habits but not so high that it will stop impulse shopping or create a significant burden when we have forgotten reusable bags.
"I am confident that the Welsh public will embrace the carrier bag charge and see it as positive step towards preserving our beautiful countryside and helping Wales to reduce its carbon footprint."
Money raised by stores through the charge will be donated to environmental charities on a voluntary basis.
However, the assembly government would pursue the powers to enforce that process if necessary.
But British Retail Consortium head of environment Bob Gordon said it was "really disappointing" the assembly government was pressing ahead with the charge and ignoring the "excellent" results in reducing bag use demonstrated by Welsh customers and retailers.
Mr Gordon said: "Education and encouragement, rather than compulsion, is the best way to achieve lasting customer change.
"By introducing a bag charge, Wales becomes the first country in the UK to impose extra charges on shoppers at a time when they're already feeling the pinch. This will especially hit low-income families."
David Rosser, director of CBI Wales said: "'The fact that retailers and consumers have already worked together in Wales to make real progress on reducing the number of single use carrier bags shows that a voluntary approach works."
He added that the carrier bag charge was likely to be "confusing for both retailers and consumers and it is likely to be excessive for low-income groups".
Wynne Williams, of Keep Wales Tidy, said people have to be discouraged from using plastic bags and a levy was welcome.
He said: "The people of Wales want to do the right thing environmentally and our surveys show that the vast majority believe that a plastic bag levy would be a good move as only those who choose to use a plastic bag would pay the levy.
"Those who wish to avoid paying for the bags need simply to use any alternative, such as a robust re-usable cloth bag."
Mr Williams added that since a similar levy was introduced in the Republic of Ireland there's been a reduction of 95.6% in the use of plastic bags.The 7p charge will apply to all single use carrier bags - whether made of plastic or paper.
There will be exemptions for certain types of bags used to carry unpackaged food or pharmacy medicines
The Environment Minister is set to launch a second consultation on the carrier bag charge at the Hay Festival on Friday.