Firms have been told to more than double the number of women on their boards by 2015, or face government measures.
Former minister Lord Davies of Abersoch has urged FTSE 350 companies to boost the percentage of women at the board table to 25% by 2015.
But he stopped short of imposing quotas, unless voluntary measures fail.
The Chartered Management Institute (CMI) said the news would be welcomed by "nervous businesses".
Lord Davies called on chairmen to announce in the next six months their goals "to ensure that more talented and gifted women" get top jobs.
"Currently 18 FTSE 100 companies have no female directors at all and nearly half of all FTSE 250 companies do not have a woman in the boardroom," he said.
"Radical change is needed in the mindset of the business community if we are to implement the scale of change that is needed."
CMI chief executive Ruth Spellman said: "The news that companies will not be forced to promote female workers to the boardroom by quota will be widely welcomed by nervous businesses."
"However, a concerted effort still needs to be made to use female talent, otherwise companies will be missing out on a vast array of talent at their disposal."
Diverse talent pool
The main recommendations of the report include:
- All heads of FTSE 350 companies should set out the percentage of women they aim to have on their boards in 2013 and 2015
- FTSE 100 boards should aim for a minimum of 25% female representation by 2015
- Each year, quoted companies should be required to disclose the proportion of women on the board, women in senior executive positions and female employees in the whole organisation
- Company bosses should disclose meaningful information about their firms' appointment processes and how they address diversity in annual reports
- Recruitment firms should draw up a voluntary code of conduct addressing gender diversity and best practice covering FTSE 350 board level appointments.
Other measures put forward include a call for more women to be promoted to executive committees to ensure there is a more diverse talent pool for companies to recruit female non-executive directors from.
"There is a business case, not just an equality case, for better diversity in the boardrooms of UK PLC," said Hay Group's UK managing director, Lesley Wilkin.
"Simply put, a diverse leadership team is a more effective leadership team."
One area that Lord Davies did not specifically address was the need for more flexibility regarding part-time roles.
"If you want to affect real change, and fast, then businesses should advertise more top-level roles with the possibility of them being worked part-time," said Karen Mattison, co-founder of recruitment firm Women Like Us.
"That's the real hammer with which we'll crack this glass ceiling."
Lord Davies called on companies to adopt a "comply or explain" approach, which would encourage companies to publish their own targets, and comply with them or explain to shareholders why they have not done so.
Currently a total of 113 women hold 135 FTSE 100 directorships - just over one per firm.
The most recent report from the Cranfield School of Management on female representation in the boardroom found that in 2010 women made up only 12.5% of directors of the FTSE 100 companies.
Only 5.5% of FTSE 100 executive directors were women. These executive director positions are typically the most senior and hands-on roles in companies, such as chief executives or chief financial officers.
Women are more likely to be non-executive directors. According to the report, women filled 15.6% of non-executive roles in 2010. These non-execs are external members on the board who are not involved in the day-to-day running of firms.
FTSE 250 companies have an even lower proportion of female directors than FTSE 100 companies, at 7.8%, and nearly half of them do not have any women in the boardroom.