Business Secretary Vince Cable said an initial public offering (IPO) is expected in the coming weeks.
Members of the public will be able to apply for shares as well as institutional investors.
Mr Cable said it was an "important day" for the Royal Mail and its employees.
The announcement came ahead of a meeting of Communication Workers Union officials to discuss the sell-off and their plans for a strike ballot.
The Government confirmed that 10% of shares will be given to 160,000 Royal Mail workers.
Members of the public will be able to buy a minimum of £750 of shares.
Analysts expect the sell-off will make up to £3 billion.
Mr Cable said: "The Government is taking action to secure a healthy future for the company. These measures will help ensure the long-term sustainability of the six days a week, one price goes anywhere universal postal service.
"By announcing that we intend to move ahead with a sale of shares in Royal Mail we are completing the third and final part of the reforms agreed in Parliament two years ago."
All shares will be sold at the same price, with full details in a prospectus to be published "in due course".
The IPO is expected in the coming weeks after ministers said they expected to complete the sale in the current financial year.
Royal Mail chief executive Moya Greene said: "Our strategy is delivering a revitalised company, with a unique, UK, multi-use network through which we are proud to deliver the universal postal service for all UK citizens."
Chuka Umunna, shadow business secretary, said: "Ministers are pushing ahead with this politically motivated fire sale of Royal Mail to fill the hole left by George Osborne's failed plan.
"This is taking place despite opposition from a huge coalition including the Conservative Bow Group, the Countryside Alliance, the National Federation of Subpostmasters (NFSP), the cross-party BIS (Department for Business, Innovation & Skills) Select Committee as well as Royal Mail employees themselves.
"The Government has not addressed the huge concerns which remain on the impact the Royal Mail sale will have on consumers, businesses and communities, but ministers are ploughing on regardless."
NFSP general secretary George Thomson said: "I am extremely disappointed and concerned that the Government is pressing ahead with a plan that will undoubtedly jeopardise the future of thousands of post offices.
"We simply have not had the promised new Government work that needs to be delivered before the sale of Royal Mail and which would safeguard the future survival of an independent Post Office.
"We are now calling on the Government to halt the sale until we can be sure that new work is forthcoming. We are also urging ministers to retain a share in Royal Mail to ensure government has the ability to protect the interests of post offices and their customers, which are already under serious threat.
"Failure to do so will amount to a reckless gamble and risk thousands of post office closures that will rip the heart out of communities across the country."
The Communication Workers Union's meeting of local officials today is due to be addressed by the Royal Mail chief executive.
The union is planning to ballot its members for strikes in the next few weeks over pay, jobs and other issues linked to privatisation.
Mario Dunn, campaign director of Save Our Royal Mail, said: "This might be good news for the bankers but it is bad news for Royal Mail customers.
"The elderly, people in rural areas and small businesses will be particularly hard hit by the inevitable price rises and service reductions that will follow this privatisation.
"Royal Mail is a successful public sector enterprise. This is an unnecessary and ultimately political privatisation."
Business minister Michael Fallon said it was a "very exciting day" for the Royal Mail, adding: "It is the final step to help modernise the business and allow it to invest in the future."
The minister said the Government was aiming for a majority sale so Royal Mail could access capital markets like any other British business.
At least 50% of the business will be sold, although Mr Fallon would not give exact details of the size of the sale and would not estimate how much money will be raised.
He said there was "sufficient appetite" from investors to justify going ahead with the sell-off.
Asked about the prospect of a strike by postal workers, he said: "Strike action will not derail the sale. There is no need for strike action - a pay rise of 8.6% over three years has been offered.
"Teachers and nurses are only getting 1%."
Adam Marshall, director of policy and external affairs at the British Chambers of Commerce, said: "An efficient, effective postal service is a critical part of Britain's business infrastructure.
"Regardless of Royal Mail's future ownership structure, services that support British business must remain at the heart of the company's mission and obligations.
"Many public services, including the post, can be delivered well by private companies. The key to a successful flotation is to ensure that the universal service obligation, both to businesses and individuals, is guaranteed. "
Billy Hayes, CWU general secretary, said: "This isn't about what's best for the Royal Mail, it's about vested interests of government ministers' mates in the City. Privatisation is the worst
way to access to capital as it's more expensive than borrowing under public ownership. There's no competition with money for schools and hospitals as the Government would have
you believe - look at Network Rail which has borrowed billions on private markets at cheaper rates under an arrangement which doesn't affect public debt. This is simply about dogma
from old fashioned Tories wedded to privatisation.
"We remain convinced that privatisation is the wrong decision for Royal Mail. It would be bad for customers, bad for staff and bad for the industry. Privatisation would put jobs and
services at risk and lead to higher prices for customers. We've seen it happen time and again in other industries.
"We're taking this to Labour party conference and we want a commitment that a Labour government would renationalise Royal Mail if privatised. Privatisation is an old-fashioned
idea and a breach of the public's trust. It would destroy a centuries-old public service."
Dave Ward, CWU deputy general secretary, said: "Today's announcement gives us little new information. Everyone knew the Government's intention to float Royal Mail this
financial year but we're surprised they've chosen to start this process at the very time we are balloting our members for strike action. This could put investors off.
"We're pressing ahead with our ballot of 125,000 postal workers and we will continue to fight privatisation and the potential impact of a sale on jobs, terms and conditions. CWU is here
for the long-haul. Any owner will have to deal with issues in the industry and take the workforce with them.
"Investors should take note of public opinion too - 70% of the public are against privatisation according to the latest poll this weekend."