The Forestry Commission plans to give millions of pounds of public money to landowners to cull grey squirrels.
There are some five million grey squirrels in the UK and this plan is the first national one to manage their numbers.
Tens of thousands could be killed each year.
Red squirrel numbers are estimated at between 120,000 and 140,000, with 75% of them in Scotland.
The scheme, beginning this month, is to protect both red squirrels and woodland.
Grants from the UK government or the EU will be available to those who agree to kill the animals on their land by whatever technique they prefer, such as poison or shooting.
Funding will be £100 per hectare per year for five years
There will also be Government funding available to help neighbouring landowners cooperate to control grey squirrel numbers together.
Further funding will go to scientific research into vaccines to stop the animals breeding so rapidly.
According to the Forestry Commission, the grey squirrels “out-compete our native red squirrels as well as spreading the squirrel pox virus to them.”
The animals are also said to cause as much as £10 million in damage to British woodlands every year.
Grey squirrels were imported from the US in the 19th century.
