Under the scheme, those who have had five years in a council house could receive a 35% discount, with an extra 1% for each added year up to a maximum of £75,000.
The extension will be available from April this year.
Tenants in flats will get 50% off after five years, with 2% added yearly.
The government said the cash raised from the sales would be put towards new affordable homes for rent.
Cameron said: “We're rebooting the right-to-buy scheme to increase discounts for two million tenants in social housing in England.”
Housing minister Grant Shapps said: “We're scrapping the miserly restrictions on the level of discounts under Right-to-Buy - great news for thousands of tenants who have done well for themselves and want to buy the home they live in.
"But we are determined to maintain the number of affordable homes for rent - so for the first time, homes that are sold will be replaced by a new affordable homes, helping councils meet housing need and getting the nation building again.”
Fewer than 3,700 Right-to-Buy sales were made last year compared to a peak of 84,000 less than 10 years ago.
