The European governing body, Uefa, admitted recently that it was looking into the possibility of placing a regional ban on TPO should Fifa not prohibit it worldwide but now the world association has moved to do just that.
"The Fifa Executive Committee (ExCo) has taken the principle decision that third-party ownership shall be banned with a transitional period," Fifa announced on Twitter.
The practice is already outlawed in countries such as England, France and Poland but the abuse of the system has led to concerns that the integrity of some matches is being compromised and Uefa president Michel Platini is delighted by Fifa's announcement.
"I am very happy for football and I am very happy for players that Fifa has followed Uefa's initiative and recommendation to outlaw the practice of third-party ownership," he declared.
"I have been constantly warning for years that this practice – which is becoming increasingly widespread – is a danger to our sport. It threatens the integrity of our competitions, damages football’s image, poses a long-term threat to clubs’ finances and even raises questions about human dignity."
At a press conference following the ExCo meeting in Zurich, Fifa president Sepp Blatter refused to say whether or not he had handed back a €20,000 (£15,600) watch given as a gift by the Brazilian FA at this summer's World Cup.
A statement from Fifa earlier in September demanded that 65 Parmigiani watches handed over to ExCo members and heads of national associations be returned since they breached Fifa's code of ethics.
However, Blatter has challenged the verdict, telling the media that the ethics code is too vague.
"This problem over the watches is a non-problem," he claimed. "What is wrong? According to the code of ethics, maybe it is the value but what is the value? It says in the code of ethics only gifts of more than a 'nominal value' must be returned."