UEFA said the key driver behind the Nations League is "sporting integrity", saying there is an increasing feeling in the game that international friendlies do not provide adequate competition.
The governing body also believes the new tournament will help improve the quality and standing of international football, as it will allow all nations to play competitively at their level.
UEFA explained in a statement: "The Nations League and the Euro qualifiers will be linked, with the new competition allowing an extra chance to qualify for Euro final tournaments.
"The competition and proposed amended qualifying formats for the European qualifiers, starting with Euro 2020, came after a thorough consultation process with UEFA's member associations, which began in 2011."
The exact format of the Nations League has yet to be finalised and will be the subject of further discussions between the associations, but the concept is for the 54 national teams to be divided into four large divisions according to coefficient rankings.
The statement continued: "Prior to Euro 2020, each division will be sub-divided into four pools of three or four teams, so each team plays four to six matches between September and November 2018.
"The final four competition, involving the four pool group-winners of group A, will start in 2019, whereas play-offs for the Euros will then take place in March 2020.
"National teams will thus either be competing to become Nations League champions, or be fighting for promotion and to avoid relegation in their groups, as well as to qualify for Euro play-offs."