A new initiative will be the launch of a knockout cup competition played over four independent weekends. League matches will begin early next season, with the final round taking place in May 2004.
SRU Chief Executive Bill Watson said: "We have sought for some time to see the Celtic League expanded into a season long competition. The restructuring of the game in Wales has enabled the Celtic countries to achieve our objective.
"Our competition next season will deliver more meaningful games of rugby, raising the intensity of every game played. I know the three Scottish teams will welcome this very significant development."
Glasgow's new coach, Hugh Campbell, was equally enamoured: "This is definitely a step forward, and the new structure will be much more acceptable to the players. For those involved in the World Cup it takes some of the pressure off and, of course, it gives a window of opportunity for some of the younger players."
The teams that will compete in the 2003/2004 Celtic League and Celtic Cup will be:
Ireland Munster (champions), Connacht, Leinster and Ulster.
Scotland The Borders, Edinburgh and Glasgow.
Wales Bridgend/Pontypridd Region, Cardiff Region, Ebbw Vale/Newport Region, Llanelli Region and Neath/Swansea region.