The polls watchdog said the SNP's proposed question – "Do you agree that Scotland should be an independent country? Yes/No" – was potentially biased in favour of a Yes answer.
Instead it recommended: "Should Scotland be an independent country? Yes/No".
The suggestion was immediately accepted by referendum minister Nicola Sturgeon.
Holyrood ministers also agreed to change the proposed spending limits for campaign organisations and political parties in the run-up to the 2014 poll.
The Electoral Commission said the two lead organisations, Yes Scotland and Better Together, should each be allowed to spend £1.5 million in the last 16 weeks of the campaign, when strict rules apply.
It is double that proposed by the Government, but the watchdog insisted the higher limit was necessary to let both sides get their message across and discourage efforts to bend the rules.
Political parties will also be set spending limits based on their share of the vote at the last Holyrood election.
Under the Electoral Commission's formula, the pro-independence parties will have a slight potential advantage of almost £63,000 over their pro-UK rivals.
The SNP, as Holyrood's biggest party, will be able to spend £1.344m, more than £500,000 above Labour's limit of £834,000. The Tories will be allowed to spend £396,000, the LibDems £201,000 and the pro-independence Greens £150,000.
It means pro-independence parties can spend £1.494m combined, compared with £1.432m for the pro-UK parties.
Other bodies will be required to register as campaign organisations if they plan to spend more than £10,000. They will be bound by electoral rules and allowed to spend up to £150,000 –also higher than the SNP wanted.
In an unexpected move, the Electoral Commission also urged the Scottish and UK Governments to work together to provide clarity on the next steps in the event of either a Yes or No vote.
The call, it said, reflected a desire among voters for "factual information" about the negotiations that would follow a Yes vote or possible moves to increase devolution if Scots opt to remain in the UK.
A similar Scottish Government plea for "transition" talks on the negotiating process was knocked back by the Westminster Coalition earlier this year.
However, the Electoral Commission hopes to set out the next steps in public information leaflets in the run-up to the referendum, if the two governments can agree.
The watchdog has spent the past three months testing the ballot paper question for fairness and clarity and assessing spending limits.
Pro-UK campaigners had been concerned about the question, which the Electoral Commission said "potentially encouraged people to vote Yes and should be replaced by more neutral wording".
Nationalists feared an alternative campaign funding formula which would have put them at a £1m disadvantage.
Ms Sturgeon – who had repeatedly threatened to over-rule the politically neutral watchdog if she disagreed with its findings – said its proposed spending limits provided a "level playing field".
Scottish Secretary Michael Moore said the UK Government would publish a paper on the post-referendum process next month.
He added: "We are pleased the Commission recognises independence cannot be pre-negotiated and that voters must have a better understanding of the huge changes becoming a separate country would entail."
Blair Jenkins, the head of the pro-independence Yes Scotland campaign, accepted the Electoral Commission's recommendations in full as "an excellent step forward".
Former Chancellor Alistair Darling, leader of the pro-UK Better Together campaign, said: "I am pleased that the impartial Electoral Commission has rejected the fixed referendum question which Alex Salmond demanded.
"Over the past few months, we have called on the nationalists to follow our lead and agree to having the Electoral Commission set the rules. It looks like we have won that argument."