Legal costs for package holiday sickness cases will be fixed under new rules aimed at deterring false claims.
Similar controls are in place for other personal injury claims, but they will now be extended to cases when holidaymakers seek compensation.
The travel industry says claims have mushroomed in recent years despite illness in resorts declining.
Travel agents are now calling on the government to ban cold calls encouraging people to make a claim.
The Association of British Travel Agents (Abta) said there were about 35,000 claims over holiday sickness in 2016, a 500% rise since 2013.
The industry said the total cost of all claims was £240m in 2016 and the growth in cases risked raising holiday prices for all.
It said that many tour operators were put off challenging cases in court owing to the potential of spiralling legal costs.
In turn, this is said to have prompted claims management companies to encourage tourists to seek holiday sickness compensation.
The government asked the Civil Procedure Rule Committee, which is responsible for setting rules on legal costs, to consider bringing package holiday claims under the same rules as personal injury claims.
The committee has approved that move and the limits on legal costs will take effect in the coming weeks.
Justice Minister Rory Stewart said those claiming compensation when they had not been being sick on holiday was fraud.
"This damages the travel industry and risks driving up costs for holidaymakers. This behaviour also tarnishes the reputation of British people abroad. That is why we are introducing measures to crack down on those who engage in this dishonest practice," he said.
Mark Tanzer, chief executive of the Association of Travel Agents said: "Closing the legal loophole before the summer should lead to a reduction in the number of false claims.
"We encourage the government to keep this matter under review and continue to pursue a ban on cold calling by claims management companies in relation to sickness claims."
What about genuine claims?
Julie Vallance, legal director at Lime Solicitors
"As soon as a holidaymaker suffers from sickness while on holiday abroad, and if that holidaymaker really believes that it is because of, say, food poisoning from the hotel, he or she should:
- Report the illness to the holiday representative
- Ensure that a written record of the complaint is recorded and ask for a copy
- Seek medical attention and obtain a copy of the doctor's record
- Keep any receipts for any medication purchased and keep receipts for any taxi fares incurred in seeking medical advice
- Speak to other holidaymakers in the same hotel to establish whether or not others have also suffered from the same or similar sickness and get their names and addresses
"A package holiday sickness claim, like any other personal injury claim will only succeed if it can be proven that the individual suffered as a result of negligence, on the balance of probabilities. Solicitors will only receive costs on successful claims."