Prime Minister Rishi Sunak said the coronation would be a “unique moment for our country” as the government proclaimed the extra bank holiday to mark the coronation next year.
The holiday, for all four UK nations, will fall on Monday, May 8, two days after the coronation at Westminster Abbey, in central London on Saturday May 6.
“The coronation of a new monarch is a unique moment for our country,” Mr Sunak said.
“In recognition of this historic occasion, I am pleased to announce an additional bank holiday for the whole United Kingdom next year.
“I look forward to seeing people come together to celebrate and pay tribute to King Charles III by taking part in local and national events across the country in his honour.”
Mr Sunak said it would be an opportunity for families and communities across the country to come together to celebrate, as when King Charles's mother, Queen Elizabeth II, was crowned in 1953.
Scotland's First Minister Nicola Sturgeon said "the coronation will be a historic moment for Scotland, and the Scottish Government wants to give as many people as possible the opportunity to join the celebrations.
“Scotland will want to send its best wishes to His Majesty, King Charles III, and the Queen Consort.”
The service will be conducted by the Archbishop of Canterbury and will take place at Westminster Abbey, where the monarch's mother's funeral took place in September.
Queen Consort Camilla will be crowned alongside King Charles.
Buckingham Palace has said the ceremony will be “rooted in long-standing traditions and pageantry” but also “reflect the monarch’s role today and look towards the future”.
It described a “solemn religious service, together with an occasion for celebration and pageantry”.
The coronation falls on the birthday of the Duke and Duchess of Sussex’s son Archie, who will turn 4. It has not yet been confirmed who will attend the ceremony and whether or not Prince Harry and his wife Meghan will be among those invited.
It is also expected to be on a smaller scale and shorter than the late queen’s coronation.
The announcement of the additional bank holiday came after calls from Tory MPs for the government to either move the early May bank holiday from May 1 to coincide with the coronation weekend or to declare an extra day off.
The Chancellor of the Duchy of Lancaster, Oliver Dowden, said "the coronation combines the sacred and the solemn but it is also celebratory.
“This bank holiday will once again give people across the United Kingdom the opportunity to come together as families and communities to welcome His Majesty to the throne as we mark this important day in our nation's long history.”