The competition, which starts in September 2018, will also provide four qualifying spots for Euro 2020.
Uefa is still discussing the details of the format, but there will be four divisions - sub-divided into four smaller pools - and each division will have a 'final four' competition between the winners of each pool.
There will be promotion and relegation between divisions.
The tournament will replace most international friendly fixtures, with pool matches played between September and November 2018 and the 'final four' competition for each division played in 2019.
The opportunity to qualify for the European Championships is intended to make the League of Nations competitive.
"Twenty teams will advance from the qualifying competition to the Euro 2020 finals - which are being played in 13 cities around Europe," Uefa general secretary Gianni Infantino told delegates at the authority's Congress in Kazakhstan on Thursday.
"That leaves four extra slots to be filled and they will come from four teams from the Nations League who have not otherwise qualified."
On current ranking, England would be in the top division alongside the likes of Spain, Germany and Italy. Each division would then be divided into pools of three or four teams, with the winners of each pool qualifying for a semi-final and final, played at neutral venues.
Scotland, Wales and Northern Ireland - ranked 31, 34 and 39 respectively by Uefa (external) - could find themselves playing each other in the third or fourth divisions using the current national team coefficient.
While matches will be played on dates reserved for friendlies, there will still be flexibility for smaller countries to arrange high-profile fixtures with bigger European teams and for nations to play friendlies against national sides from outside Europe.
The Football Association has backed the plan, with chairman Greg Dyke saying earlier this month: "The hard thing is the detail but I think a Nations League where we played the top nations would be very attractive."
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