The Europa League will mirror the new competition, so the group stage will be streamlined from 48 to 32 teams.
Provisionally called UEL2, the competition will sit below the Champions League and Europa League from 2021.
This move was confirmed at the Nations League Finals draw in Dublin on Monday, with all forthcoming knockout matches in UEFA's flagship club competition to benefit from VAR.
UEFA president Aleksander Ceferinsaid: "The new UEFA club competition makes UEFA's club competitions more inclusive than ever before".
Ceferin has taken his proposal to the members of UEFA's Executive Committee and it's expected that VAR will enter at the Last 16 stage of the competition.
However, the new competition is created to appease those further down the food chain unhappy at changes to guarantee English, Spanish, German and Italian clubs 16 of the 32 places available in the Champions League.
Teams that finish second in their Europa League group and third-placed teams from the eight Champions League groups will playoff to join the eight group winners in the last 16.
The new European competition will offer one Premier League club the chance to participate with various other teams from around the continent.
The "Europa League II" will not effect the schedule of either the Champions League or the Europa League as games are set to be played on Thursday afternoons. "This has been achieved with a strategic approach, and in accordance with UEFA's objective of having both more quality and more inclusivity in our club competitions".
The Associated Press, citing sources with knowledge of the situation, reported that video review is being fast-tracked into the Champions League this season, according to a report.