Honda will give an upgraded engine to its Red Bull and Toro Rosso teams at this weekend's French Grand Prix.
Three of the company's four drivers will have the engine - Red Bull's Max Verstappen and Pierre Gasly and Toro Rosso's Daniil Kvyat.
The move means a grid penalty for Kvyat for exceeding the permitted usage of engine parts in a season.
Toro Rosso's Alexander Albon will upgrade at a later date to avoid both cars incurring penalties at one race.
Honda boss Toyoharu Tanabe said the engine was more powerful but had not yet reached the level of Mercedes and Ferrari.
"It's a step in the right direction and we will continue our development throughout the rest of the season," Tanabe said.
Tanabe said that the improvements were "mainly" in the internal combustion engine and turbocharger.
Verstappen finished fifth at the Canadian Grand Prix, while team-mate Gasly crossed the line in eighth. Kvyat claimed 10th.
He said the improvements had been developed in conjunction with Honda's aeroplane jet engine department in the area of aerodynamic design.
"Their work and ours has many common technical features," Tanabe said. "For example, our 2018 update to the MGU-H, which dramatically improved its reliability, came as a result of our collaboration with them."
The MGU-H is the part of the hybrid system that recovers energy from the turbocharger in F1's engines, which produce close to 1,000bhp from a 1.6-litre V6 turbo and have set new standards for thermal efficiency - the amount of power produced from a unit of fuel.
Kvyat will receive a grid penalty because he has already used he permitted maximum of three internal combustion engines this season, as has Albon.
The new-spec engine also takes Verstappen and Gasly to their maximum of ICEs, which means it is inevitable they will receive grid penalties later in the season as Honda continues its development in an attempt to catch up with the best engines.