At least £2bn of shares will be sold to retail investors and members of the public will be offered a discount of 5% of the market price, the Treasury has announced.
An additional incentive will see a bonus share offered for every ten shares held by retail investors for over a year.
The value of the bonus share incentive will be capped at £200 per investor, and the Treasury said members of the public applying for investments of less than £1,000 will be prioritised.
Potential investors can pre-register for the sale at www.gov.uk/lloydsshares, which will allow them to receive regular updates.
The government’s stake in Lloyds has already come down from 43% at the time of the 2008 bailout to 13% remaining currently.
Helal Miah, investment research analyst at The Share Centre, said: “The deal looks attractive to those investors looking to take a medium to long-term interest in Lloyds. It is expected that the shares will be offered at a 5% discount to the market price of the shares. In addition, there is likely to be a bonus share for every ten held for more than one year. On top of that, Lloyds’ dividend yield should start to become an added attraction for investors over time.”