Female soldiers will be permitted to take up previously prohibited roles in tank units of the Royal Armoured Corps from November 2016.
Women are expected to be allowed to apply for front line jobs with the Infantry, Royal Marines and Royal Air Force Regiment by the end of 2018.
The rule change came after lengthy research into whether women soldiers on the front line would be more at risk of "musculoskeletal injury, psychological issues and impaired reproductive health."
"It is vital that our Armed Forces are world class and reflect the society we live in," Cameron said in a statement.
"Lifting this ban is a major step. It will ensure the Armed Forces can make the most of all their talent and increase opportunities for women to serve in the full range of roles."
Women make up more than 10% of the British military, but until now they have been restricted to non-ground combat roles.
General Nick Carter, Chief of the General Staff, said women were already operating on the front line "with distinction" in some capacities.
"I am delighted that we are now able to extend the opportunities for women to serve ... in all roles, we will truly help to maximize the talent available to the Army."
Defence Secretary Michael Fallon said he had "always wanted roles in our armed forces to be determined by ability, not gender."
"Women have already given exemplary service in recent conflicts ... By opening all combat roles to women, we will continue to build on these successes and improve the operational capability of our military."