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The current subsidy given to Welsh farmers will be scrapped after 2021, it has been confirmed.
The Basic Payment Scheme gives farmers money based on how much land they use.
The Welsh Government plans to replace the scheme and will consult on a new proposal for an annual payment based on work done to improve the environment.
The NFU Cymru union said any new scheme following Brexit must offer equal benefits to protect farmers from price volatility and safeguard food security.
European Union subsidies - amounting to around £350m a year - make up more than 80% of farm incomes in Wales on average.
The vast majority of cash is currently given to farmers as so-called "direct payments", under the Basic Payment Scheme.
The vote to leave the EU prompted a review of the subsidy, which Rural Affairs Secretary Lesley Griffiths has said made Welsh farms uncompetitive.
Initially, the Welsh Government had suggested two new grant schemes would come in its place after the UK leaves the EU.
One would offer business grants, while another would reward farmers for delivering public goods such as protecting wildlife habitats and tackling climate change through restoring peat bogs and planting new woodlands.
Following a consultation, Ms Griffiths said she had decided to roll both schemes into one.
"I am proposing a new single sustainable farming scheme, allowing us to explore economic, environmental and social opportunities at the same time," she said.
The minister said the proposals would help secure a "prosperous, resilient agricultural sector in Wales".
"We will propose an annual payment to farmers in return for the environmental outcomes delivered on their farm - targeted at reversing biodiversity decline, meeting our carbon budgets and hitting our clean air targets," she said.
A further consultation on the plans will be launched ahead of the Royal Welsh agricultural show in July.
The payments in their current form are set to continue until 2021, after farming leaders warned the changes were being brought in too quickly and could decimate the industry.
NFU Cymru President John Davies claimed "the devil will be in the detail".
He said: "Any new scheme must offer equal, if not superior, benefits [to the Basic Payment Scheme], which is why NFU Cymru has always advocated the inclusion of a stability payment to help protect farmers from volatility, safeguard food security and facilitate the delivery of outcomes that benefit the whole of society."