WRU chiefs will make the controversial change in a bid to revive Welsh rugby union at both club and international level.
A proposal in August had suggested cutting the four regional teams -- Cardiff, Dragons, Ospreys and Scarlets -- down to just two.
But following a consultation process, WRU chair Richard Collier-Keywood said the board had unanimously agreed to implement a three-team structure "designed to deliver long-term success through rugby alignment across all levels of the game and financial sustainability".
The WRU confirmed their plans to grant three licences for men's clubs -- one for Cardiff, one in the east of Wales and one in the west.
Ospreys and Scarlets currently have deals until June 2027, and Cardiff and Dragons until 2028.
Equal funding will be given to the three teams, starting at an initial £6.4 million per year and rising to £7.8 million.
The current financial commitments to all four regions will remain for now, as will player contracts, until the conclusion of those agreements already in place.
"We have heard loud and clear from the consultation that people want a long-term fix and not a short-term patch. We have listened and we agree," Collier-Keywood said.
"Our decision is that the future structure of elite men's rugby will be based on three professional men's clubs, replacing the current four-team model, alongside two women's elite teams."