The Prime Minister has announced plans to introduce a Co-operatives Bill that will cut red tape and help to build a fairer economy.
Legislation governing co-operatives and mutuals into a single statute will be put before parliament before the next election.
The Co-operatives Bill will help employees take a greater stake in their companies. Mr Cameron said they were key to "popular capitalism" and for "everyone to share in the success of the market".
The Prime Minister also said he wanted to encourage firms to show social responsibility and that the Chancellor was considering new tax rules to prevent abuse.
David Cameron said: "We know that breaking monopolies, encouraging choice, opening up new forms of enterprise is not just right for business but the best way of improving public services too.
"There are over 12 million co-op members in the UK. That's more people than there are shareholders in the economy.
"But right now there are too many barriers in the way... so today I can announce they will all be brought together and simplified in a new Co-Operatives Bill that will be put before parliament."
Welcoming the announcement, Ed Mayo, Secretary General of Co-operatives UK, added: "The new act is intended to make it as easy and natural to form a co-operative as any other form of business. We are delighted to see the Coalition taking action to put co-operative businesses on an equal footing and create a diverse economy.
"Co-operatives, as well as being widely recognised for their ethical business practices, are a vital part of the British economy, employing more than 235,000 people, turning over more than £33 billion each year and generating a significant amount of wealth for the country."
Click here to read the full speech