From 28 February 2011, brands will be able to feature paid-for references in broadcasts including: TV series, sports programmes, soaps, films and entertainment shows.

However, product placement will be prohibited in all children’s, news broadcasts and in all UK-produced current affairs, consumer affairs and religious programmes.

The new legislation will also ban product placement of any tobacco, alcohol, baby milk, weapons, escort agencies, medicines and gambling brands as well as any foods or drinks high in fat, salt or sugar. In February this year advertisers expressed their concerns about this “blacklist” for product placement.

Ofcom’s rules state that product placement cannot impair broadcasters’ editorial independence and must be editorially justified, meaning programmes “cannot be created or distorted so that they become vehicles for the purposes of featuring product placement”.

The announcement follows a 10 month-long public consultation on the detailed changes to Ofcom’s code.

Viewers will see a new product placement logo which much appear for a minimum of three seconds at the start and end of programmes so it is clear when brand references have been paid for. The logo will also appear following any advertisement breaks.

Commercial TV stations intending to broadcast programmes with product placement will launch a new audience awareness campaign overseen by Ofcom in the New Year, including short information slots in advertisement breaks of popular programmes.

Product placement is prevalent on US television on high-profile programmes such as Sex and The City with numerous references to fashion brands and American Idol where Simon Cowell often sips from a branded Coca-Cola glass.

Product placement company MirriAd says product placement in the US accounts for 5% of total TV advertising revenue. It is forecast the UK market will be worth around £150m initially.

The new product placement rules have also led Ofcom to relax TV sponsorship regulations, with brands now able to use product placement in programmes they are sponsoring and their logos can appear as brief sponsorship credits during programmes.

Ofcom has also relaxed rules on paid-for references to brands and products in radio programmes, which take effect today.